Rural Home Loans - 100% Financing With USDA Home Loans!

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Rural Home Loans are mostly provided by the USDA Rural Development Guaranteed Housing Loan Program. This program was created and designed for lower-income people that live in rural areas of the country.

The United States Department of Agriculture (USDA) does not provide the funding for these rural home loans but they do guarantee the repayment of the loans to approved lenders.

USDA home loans have existed for a long time, but because of all of the easy mortgage money available in the mortgage market from around year 2000 to year 2007 most people just didn't think of or bother to pursue an USDA home mortgage. But that has certainly changed nowadays and they are becoming more popular each day.

USDA Rural Development Loans are almost the last of 100% financing programs with the exception of HUD FHA Loan . The HUD $100 Down Payment Incentive Program comes close to 100% financing with only $100 down payment but it is only for buying HUD home foreclosures.

For many years USDA rural home loan was known as a "farmer's loan" but this type of mortgage is not only for farmers anymore and you do not have to even live out in the "country", in some cases you can live in towns and small cities with population up to 25,000.

What Are The Special Advantages Of USDA Rural Home Loans?

1. No DOWN PAYMENT! This is the most important advantage to a USDA home mortgage. You can finance up to 100% of the appraised value of the home you are purchasing. As mentioned above this is one of the last 100% financing programs left.

2. There are no mortgage insurance payments. Unlike FHA loans, USDA home loans does not have an upfront mortgage insurance payment or an ongoing monthly mortgage insurance payment. This will have you a lot of money over the course of the loan.

3. Competitive interest rates. The interest rates for these rural home loans are very competitive with other 30 year loans such as convention home loans and also the FHA Home Loan Program .

4. The USDA Rural Development Loans are insured by the government. Because the government is guaranteeing the loan, lenders are more willing to provide the best loan deals including lower interest rates.

5. The credit guidelines for USDA mortgages are more flexible. The guidelines more flexible than other loans including FHA Home Loan Program Requirements And Guidelines . Borrowers are required to show they have the financial ability to repay the loan. But the credit guidelines are not so strict that if you credit is not perfect that you will not be able to get a USDA home mortgage. Although credit guidelines are not as strict as conventional loans most lender are now requiring at least a 620 credit score in today's mortgage market.

6. There is no stated maximum loan amount. The maximum loan amount is based entirely on your ability to repay the loan, not limited to the price of a property.

7. USDA Rural Home Loans can be used to finance existing as well as new homes. There are no restrictions on the size or design of the home being purchased. If you are going to buy an existing home it will have to been in good condition and structurally sound.

8. 30 Year Fixed Rate.  USDA mortgages are 30 year fixed rate loans and there is no prepayment penalty.

9. No First-Time Buyer only requirements.  There is no first time home buyer requirements.

10. Gifted funds.  You can use gifted funds for closing costs or if you want to make a down payment. There is no limit on the amount of gifted funds.

11. Rolled costing costs and repairs in mortgage.  Closing costs and repairs can be included in the loan amount up to the appraised value of the property.

12. Repairs can be financed into a USDA mortgage. Another great benefit of this rural home loan is you can finance 100% of any repairs into the loan based on "after repair appraised value". So, if the house you are considering buying does need some repairs but you do not have the cash reserves for the repairs you can just roll them into the mortgage. This means that USDA Rural Housing Loans can be renovation loans also!

There are just a few disadvantages to the USDA home loans. One is , as mentioned before, you have to live in a designated rural area. Also, there is some income restrictions based on the HUD determined median income level of the county or area you reside in.

Important Update On USDA/Rural Housing Interpretation Of Outbuildings

There has been an update in the interpretation of outbuildings by USDA/Rural Housing. Rural Development may NOT loan on any farm related structure or any structure that has farm related equipment in it. This may include grain bins, silos, and animal confinement buildings. This may also include a building or barn that has horse stalls. A simple building such as an 8 foot by 10 foot chicken coop will make a property ineligible because it was build to house livestock and the same goes for a pen for 4-H pigs.

Ok, this update on USDA/Rural Housing interpretation of outbuilding does not make any sense to me! What kinds of buildings do they expect to find in the rural areas of America? Most people want to live in the country so they can have horses, chickens, or other farm animals if they want to. Leave it up to the government to come up with such restrictions on outbuildings for rural areas.

USDA interpretations of different things are always changing, be sure to check with your realtor and your lender for any changes. A USDA rural home loan is still a great way to finance a home with no money down.

There is also a one time payment guarantee fee of 3% of the amount of the loan which is payable at closing and the guarantee fee can be financed into the mortgage. But you do not want to let these two restrictions stop you from checking into this great program.

USDA Home Loans are perhaps the best rural home loans product available on the market today!

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