If you are house hunting and considering purchasing a home in a rural area, be sure to talk to your mortgage officer about the USDA Rural Development Single Family Housing Guaranteed Loan program.
As part of the program, the USDA partners with approved lenders, such as MidWestOne Bank, extend 100 percent financing opportunities to eligible rural individuals and families towards the purchase of a home.
The program has helped thousands of homeowners buy a home with affordable interest rates and loan terms. In fact, since the program’s inception, a total of 843 loans have been guaranteed in Iowa alone.
What are the details of the program?
The USDA’s Guaranteed Loan Program is part of the American Recovery and Reinvestment Act that was signed into law by President Obama in 2009. It is designed to increase homeownership in rural areas, create and save jobs in rural America and improve quality of life.
The program is available to families whose income does not exceed 115 percent of median income for the area.
The home you select can be new or existing, as long as it features adequate electrical, plumbing, heating, water and waste disposal and must also be located in a rural area with a population of less than 20,000.
While the maximum repayment term for the loan is capped at 30 years, there is no maximum loan amount. Interest rates are negotiated between you and your lender.
How do I know if I am eligible for the program?
To qualify, you must:
- Have adequate and dependable income.
- Have an income below county limits.
- Demonstrate a reasonable credit history.
- Be at least 18 years of age.
- Be a US citizen.
- Be unable to obtain a conventional mortgage loan elsewhere.
What are the benefits of the guaranteed loan program?
If you qualify for the program, there are many benefits, including:
- You do not need to provide a down payment. However, the loan amount cannot exceed 100 percent of the appraised value.
- The program will help finance closing costs, repairs and improvements.
- You will be guaranteed a 48-hour turnaround between the USDA and the lender.
- There are flexible credit guidelines, which means the lender will accept non-traditional credit histories.
- There is no maximum purchase price.