This is a great financing option for your retail buyers that requires no down payment, read on --
A USDA Guaranteed Loan is a Government insured 100% purchase loan. These Loans are only offered in rural area's and serviced by direct lenders that meet federal guidelines.
Home loan guidelines
Sometimes good credit and a steady income are not enough to qualify for a home loan at a commercial lending institution, such as a bank, savings and loan or mortgage company.
More rural families and individuals may be eligible to become homeowners with the help of a USDA guaranteed home loan. When the federal government agrees to guarantee a loan, lending institutions can help buyers while incurring less risk. Through USDA’s Guaranteed Rural Housing Loan Program, low- and moderate-income people can qualify for mortgages even without a down payment.
Guaranteed Rural Housing Loans
To be eligible, applicants must: Have an adequate and dependable income;
Be a U.S. Citizen, qualified alien, or be legally admitted to the United States for permanent residence;
Have an adjusted annual household income that does not exceed the moderate income limit established for the area. A family’s income includes the total gross income of the applicant, co-applicant and any other adults in the household. Applicants may be eligible to
make certain adjustments to gross income— such as annual child care expenses and $480 for each minor child—in order to qualify.
USDA Rural Development field offices can provide information on the moderate income limits for the areas that fall within their jurisdiction, and can provide further guidance on calculating household income.
Have a credit history that indicates a reasonable willingness to meet obligations as they become due, approx. 620 credit score.
Homes That Qualify:
Guaranteed loans can be made on either new or existing homes;
Homes must be located in rural areas. Rural areas include open country and places with a population of 10,000 or less and—under certain conditions—towns and cities with/between 10,000 and 25,000 residents.
USDA Rural Development field offices can determine eligible areas.
Highlights of the USDA Guaranteed Rural Housing Loan Program
Loans may be for up to 100 percent (102 percent if the guarantee fee is included in the loan) of appraised value or for the acquisition cost, whichever is less.
No downpayment is required;
Mortgages are 30-year fixed rate at market interest rates;
Loans may include funds for closing costs, the guarantee fee, legal fees, title services, cost of
establishing an escrow account and other prepaid items, if the appraised value is higher than sales price;
Home buyers make application with participating lenders;
Buyers must personally occupy the dwelling following the purchase.
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