USDA Rural Guaranteed Home Loan USDA home loans are for first-time buyers in rural areas and towns.

USDA Rural Housing Guaranteed Loan
A USDA Rural Housing Guaranteed Loan is insured by the U.S. Department of Agriculture (USDA), but it is made by a wide variety of lenders all throughout the United States. With the USDA "Guaranteeing" the loan, participating lenders are willing to make a no down payment loan with no monthly mortgage insurance.  So if you thought 100% financing was gone, think again.  Plus the fact that there is no monthly mortgage insurance payment, makes this home loan program exceptional for home buyers in rural towns and areas! A USDA loan can also be paired with a State Bond loan.

Benefits of a USDA Loan
A USDA Rural Housing Guaranteed Loan is a great homebuying product. Here are just some of the benefits of a USDA Rural Housing Guaranteed  Loan:

  • No down payment (100% financing)
  • Don't need to be a first-time homebuyer
  • Seller can pay your closing costs
  • Lower minimum credit scores
  • Compatible with down payment assistance programs
  • No monthly mortgage insurance payments
  • Available in all states with eligible rural areas

Eligibility for a USDA Loan
To get this loan you need to buy a home in an eligible rural area. You also have to meet the program's income limits.  You may still be able to qualify for this loan even with a lower credit score.  Approved lenders will need to make sure that your monthly payments are affordable. They will want to see that your housing and other debt payments are not more than 39% of your gross monthly income (before taxes).

USDA and State Bond
In most states it is possible to get a USDA-insured loan that is combined with a State Bond loan from your local Housing Finance Agency. Depending on your state's current interest rate this could be a great combination. A USDA Guaranteed Rural Housing Loan is not as common as an FHA loan, but many lenders do offer it. Shop around though as USDA loan rates, like all mortgage rates, differ and the maximum fees lenders may charge does as well.

USDA Rates and Fees
In general, the fees on a USDA-insured loan will be about the same as other loan options, but check with mulitple lenders to make sure you are getting the best rate and reasonable fees. A USDA Guaranteed Loan does have an up-front mortgage insurance premium that you typically finance as a part of your loan, but it does not have a monthly mortgage insurance premium like a conventional or FHA loan. Ask your lender to tell you more about the USDA Guaranteed Loan to see if it is a good option for you.