Choosing a Mortgage? Important Facts About the USDA Rural Development Home Loan
Decisions are a crucial part of the home buying process and choosing the right home mortgage option is one of the most important of those decisions. While most buyers today are familiar with the more common home loans, such as the conventional, FHA, and VA mortgage options, many are likely to be less familiar with the USDA Rural Development Home Loan, even though it may be a good loan option for their buying situation, whether you want to live in Jupiter Harbour or elsewhere in Florida.
What is the USDA Rural Development Home Loan?
A program offered through the United States Department of Agriculture, Rural Development Home Loans are available in two forms. The first is the Single Family Housing Guaranteed Loan Program, which is available through approved banks, credit unions, and mortgage lenders and guaranteed by the USDA.
The second type, referred to as Single Family Housing Direct Home Loans, are applied for and funded directly through housing grants via the USDA Rural Development Home Loan program. While the two programs have some distinctions, they are both designed to encourage affordable home ownership in eligible rural areas of the nation.
Who Can Apply for These Loans?
In order to be considered for either USDA Rural Development home loan option, applicants must:
- Meet certain income eligibility requirements, based on the area in which they want to purchase a home
- Be an owner-occupant, who plans to use the home as their primary residence
- Meet all current citizenship requirements
- Exhibit the willingness to meet credit obligations satisfactorily
- Be legally capable of incurring the obligations of the loan, with no history of suspension or disbarrment from a federal program
- Plan to purchase a property that successfully conforms to all USDA RD program criteria
Eligibility for both location and income are influenced by economic and other factors that may vary from area to area. All applicants must provide sufficient income verification and credit history information. Applicants for the direct option may be required to meet additional requirements.
Why Should Prospective Home Buyers Consider a USDA RD Home Loan?
For applicants who meet the income and eligibility requirements, a USDA Rural Development home loan can offer many benefits over other loan options. These can include:
- being able to purchase a new home in Palm Beach County with nothing down
- being able to use gift funds or grants toward the mortgage or costs
- receiving very competitive interest rates on both 15 and 30 year mortgages
- having the ability to qualify for the loan, even with past credit issues
- having the ability to include closing costs and certain other expenses in the loan amount
- being able to include the cost of certain necessary site preparations, services, or design features
- being able to purchase both new or existing homes, as long as they meet program qualifications
What Possible Issues Should USDA Home Loan Applicants Understand Before Applying?
While the guaranteed Rural Development home loan typically processes within similar time frames for most mortgages, the direct Rural Development home loan may take much longer to close. This can be due to both document processing issues, inspection scheduling, and the actual availability of direct funds at the time of application.
In addition, applicants for any USDA Rural Development Home Loan should be advised that the home being purchased must meet condition and safety requirements. Homes that do not meet these requirements may cause the loan process to be delayed to allow time for repairs and re-inspection. If the repairs cannot be successfully made before closing, the loan may be denied and the buyer will need to find another home and reapply.
The USDA Rural Development program offers an excellent financing option for home buyers who may have difficulties qualifying for conventional home loans. To learn more about the USDA Rural Development Home Loan and its availability in your area, interested buyers can contact an approved local lender, their real estate professional, or the nearest USDA Rural Development office.
