A couple weeks ago, I wrote a short, technical article on the qualifications of the USDA Rural Development Loan program. I was astonished by the amount of interest that was shown by the post.
Since I had such a response, I thought it would be best to expand on the USDA program in a little less technical fashion. If you would like to see the original article on USDA Rural Development loans, click the link.
If you need, or just choose, 100% financing, it is still available in many situations. What the US Department of Agriculture has done is offer government backing to a loan program (similar to FHA) to help provide low to no downpayment financing for low to moderate income individuals and families. While the USDA income limits vary by county, from personal experience, most of my past clients have qualified.
The name, Rural Development, should give away the fact that these loans are not generally available in cities or urban areas. For example, the physical city of Valparaiso Indiana would not qualify for the loan program, however the areas to the east of the city and south of the city, many with a Valparaiso address, may qualify. If you have any question, you can look the address up on the USDA website.
Another great benefit is the lack of monthly mortgage insurance premiums. There is a “loan guarantee” cost of 2% of the loan amount (just slightly above the FHA UFMIP), but that can be financed. Although the interest rate is slightly above the FHA rate, the lack of monthly MI should make the monthly payment lower or very comparable.
While with many loans credit is an issue, the current guidelines also require a reasonable minimum credit score. USDA guidelines allow you to have a low amount of older collections, especially if they are medical in origin. Have poor credit or recent negative items on your report, we can still help provide some tips on how to improve your scores and get you into a new home sooner than you might think.