The USDA Rural Housing Program was developed to increase homeownership to lower to moderate income households in rural-designated areas.
The program requires no money down and permits the Seller to assist for a maximum of up to 6% of the purchase price or the total of actual costs, whichever is less. It has household income limits which are determined by USDA are organized by County or Metropolitan Statistical Area (MSA).
Due to this, all income is considered for the program as the income of each household member is considered toward the maximum household income limit whether the household member is on the loan or not. Any income for a Borrower on the loan which is not being used for qualifying is still counted toward this maximum household income limit. Income for anyone not on the loan is not used for qualifying purposes.
The program does have mortgage insurance both upfront and as part of the monthly payment, but it is much less expensive when compared to the mortgage insurance paid on an FHA mortgage.
The property being purchased must be in a USDA rural-designated area in order for this program to be used. The property must meet the same safety and condition criteria that would need to be meet for an FHA mortgage (i.e. the property must meet minimum HUD guidelines).
The program is not restricted to first-time homebuyers.
Generally, a 640 minimum middle credit score is required and at least one borrower on the loan must have 2 credit tradelines evidence at least 12 months of perfect credit history in order to be considered.
County Down Payment Assistance (DPA) programs can be combined with this financing to help to cover a borrower’s closing costs. If the DPA program is going to put a 2nd lien against the property, it must be under the maximum Combined Loan-to-Value limit (CLTV) for the program.
We have used this program many times over the years for our customers. Please contact us to see if you qualify.