As a buyer interested in the Rural Development loan program, there are several things you should know:
- Eligibility: The Rural Development loan program is designed to help low- to moderate-income individuals and families purchase homes in eligible rural areas. To be eligible for the program, you must meet certain income and credit requirements and the property you are interested in must be located in an eligible rural area.
- Loan Types: Rural Development loans come in two types – Direct and Guaranteed. Direct loans are issued by the USDA and are meant for those with very low-income levels. Guaranteed loans are issued by a bank or other lender and are backed by the USDA. Guaranteed loans have less restrictive income limits and can be used by moderate-income borrowers.
- Credit Requirements: While the credit requirements for a Rural Development loan are not as stringent as other types of loans, you will still need to have a good credit history. A credit score of at least 640 is generally required, although some lenders may accept lower scores.
- Closing Costs: Closing costs for a Rural Development loan can be financed into the loan, but you should be prepared to pay some out-of-pocket expenses. These can include an appraisal fee, credit report fee, and other fees associated with closing.
- Property Eligibility: To be eligible for the Rural Development loan program, the property you are interested in must be located in an eligible rural area. You can check the USDA’s website to see if the property you are interested in is eligible.
- Loan Limits: Rural Development loan limits vary by location and are based on the median home price in the area. The maximum loan amount you can borrow will depend on your income, credit score, and other factors.
- Benefits: The Rural Development loan program offers several benefits, including low-interest rates, no down payment requirement, and no mortgage insurance requirement.
- Application Process: To apply for a Rural Development loan, you will need to find an approved lender and provide them with the necessary documentation, including income verification, credit history, and information about the property you are interested in.
In summary, the Rural Development loan program can be a great option for those looking to purchase a home in eligible rural areas. However, it is important to understand the eligibility requirements, loan types, credit requirements, closing costs, property eligibility, loan limits, benefits, and application process before applying for the loan.
Call us to learn more about this program and we can get you in touch with a knowledgeable lender to get you started!