Written by: Ian McDonald of The Mortgage Advisory Team
Rural Development (RD) is a loan program offered by the USDA (US Department of Agriculture). It has several features that make it unique in today’s lending environment. RD loans are limited in scope, meaning that they are only offered to folks who fit a certain profile. The main eligibility points are:
1) Borrowers need to make less than a guideline amount of annual income for all adults living in the household. This income amount varies by state and by county
2) Borrowers need to meet certain credit guidelines, although they are typically more willing to consider people who have a story than other currently offered mortgage programs
3) Borrowers need to purchase an eligible property, defined as an eligible area by the USDA and an eligible dwelling, which confines the types of homes eligible for financing. Eligible homes are, in general, stick built homes, modular homes, and brand new double wide or larger manufactured homes that are permanently secured to a foundation located on owned real estate.
These guidelines are available to any who are interested at http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do.
RD has many appealing aspects for consumers. RD requires no downpayment, requires no monthly mortgage insurance payments (only a one time upfront fee is required for RD), and offers interest rates that are most often comparable to FHA interest rates. RD is a 30 year fixed rate program with no prepayment penalty that can be used on its own, or in conjunction with many State offered bond programs (First Time Homebuyer Programs). The combination of no downpayment and no monthly mortgage insurance often results in payments that are as low as they can be for a given home.
Not all lenders offer this program, although it is available in all 50 states. Check out the website for more information about RD loan eligibility where you live.
If you would like to talk with a professional who knows the ins and outs of this program and more, please contact Ian McDonald at The Mortgage Advisory Team 320-587-8111 or at IMcDonald@houseloan.com. Ian is a great resource, very easy to talk with and extremely helpful in understanding the loan process.
We look forward to helping with all your Real Estate needs.
Mike & Missy Roterdam at 320-296-3345