USDA Rural Development Guaranteed Housing Loans
Posted on June 12th, 2011
The USDA Rural Development Guaranteed Housing Loan does not require a down payment and for now has no monthly mortgage insurance. It does require an upfront fee like FHA however.
I did read that in October of 2011 there may be changes. The upfront fee will be lowered and a monthly mortgage insurance fee will be added. The upfront fee is currently 3.5% of the loan amount and if it changes, will lower to 2%.
USDA Mortgage Features
This mortgage is one of the only ways left to get a no down payment or 100% financing mortgage to buy a home. The loan amount is based on the appraised value and the upfront fee is added to that. If your appraised value is $150,000 your loan amount would be $155,250 ($150,000 appraised value X 3.5% upfront fee $5,250. $150,000 + $5,250)
There is no cash required from the borrower for down payment or reserves.
There is also no minimum credit score for this program and its not just for first time homebuyers.
But there are some catches of course. It is for owner occupied homes only in a USDA rural development eligible area. I guess you could have figured that out by the name of this program (USDA Rural Development). The property has to be located in an eligible area to get a USDA mortgage.
Also, there are income restrictions. Just like the MyCommunityMortgage from Fannie Mae, you have to be under a certain household income amount to qualify for USDA.
Click here to search for property eligibility and income eligibility. Any mortgage company or broker can originate a USDA loan through an approved USDA lender. Its a little like VA. As a broker or a mortgage company, I would just have to pay a fee and then I can originate a VA mortgage through a VA wholesale lender.
So, just like any other government mortgage, you still have to do your homework on the mortgage company or broker originating it. A government loan does not mean you are protected by the government. The government guarantees the mortgage but it does not guarantee the person or company originating it.
Good Luck!
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Tags: Development Guaranteed, Development Guaranteed Housing, Guaranteed Housing, Housing
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