Rural Development

Guaranteed Housing

Home Financing Options for Lenders

Think Guaranteed First!

The advantages: 

• Loan up to appraised value plus the guarantee fee.

• No limit on CLTV when soft second financing is used for closing costs.

• No monthly mortgage insurance (MI).

• Maximum loan amount is the appraised value plus a one time guarantee fee of 2% (up to 102% loan to value).

• Applicant can retain liquid assets of up to 20% of purchase price.

• No cash contribution or cash reserves required from applicant.

• Unrestricted gifts, no need to document source.

• Non-traditional credit may substitute for lack of traditional credit history.

• No credit explanations when credit score is 620 or above.

• No minimum credit score.

• Repayment ratios are 29/41.  Ratio waivers are allowed with documented compensating factors.

• Not limited to first-time home buyers.

• Competitive market based fixed interest rates with 30 year term.

• Available secondary markets: wholesale lenders as well as Fannie Mae, Freddie Mac, and Ginnie Mae.

• Qualifies for Community Reinvestment Act (CRA)

• Agency approved lenders underwrite the loan.

• Any lender may originate loans through an Agency approved lender.

• Agency guarantee commitments are issued within 1-2 business days of receipt of the complete package.

• Rural Development provides lender support for questions, training, and outreach assistance.

     Choose Rural Development as the first option

• A competitive fixed rate combined with no mortgage insurance provides long term savings for the customer. 

•  Home buyers are able to retain their savings since there is no down payment requirement and closing costs can be financed up to the appraised value.

• Our most successful lenders report an overwhelming preference for the Guaranteed Rural Housing loans over other loan products because of the great value it provides to their customers.  

Applicant eligibility criteria: 

• Occupy the property as your primary residence.

• Do not have sufficient cash for a 20% down payment plus pay typical loan closing and relocation expenses.

• Be able and willing to occupy the property. 

• Be a U.S. citizen, a U.S. non-citizen national or a “qualified alien”. 

• Demonstrate an ability and willingness to meet obligations and debts as they become due.

• Have a credit history that indicates a willingness to meet obligations as they become due.

• Have an adjusted household income that is within Rural Development guidelines based on the number of persons who will occupy the home.  

• Purchase a residential property that is within a Rural Development eligible area. 

How to start.

• Any lender may immediately begin originating Guaranteed Rural Housing loans. 

• Lenders can find the appropriate forms, checklists, and regulations for self education on this site. 

• Loans must be underwritten by an approved participating lender prior to submission to Rural Development for a commitment. 

• Loan originators and brokers that do not underwrite should secure a relationship with an Agency approved underwriting lender.  

• The federal regulation governing this loan program is RD Instruction 1980-D.  .  Administrative Notices (known as ANs) supplement the regulation and provide additional guidance on specific subjects of the program.  Both can be found at www.rurdev.usda.gov/regs

• Sign up for automatic notification regarding program updates and announcements.  Register at www.rdlist.sc.egov.usda.gov/listserv/mainservlet.

• Contact your local Rural Development office to schedule training at your convenience.

Become an approved lender

• Lenders that meet the Agency eligibility criteria can underwrite and service Guaranteed Rural Housing loans.

• Approval can be requested for one state through the Rural Development headquarters of that state or for multiple states by submitting the request package to the Rural Development national headquarters. 

•  See the options at the bottom of the lender approval checklist.

 Checklists and web site links:

• Determine if the property is within the Rural Development eligible area. 

• Use the link "Single Family Housing" under "Property Eligibility". 

• Determine if your applicant's adjusted household income is within the Agency limits,

• Use the link "Single Family Housing" under "Income Eligibility"

•  What is “adjusted household income”? 

• Determine income limits by State or particular county

• Loan application package checklist 

•  Forms list

  • RD Forms

    • Form RD 1980-86, Request for Reservation of Funds
    • Form RD 1980-21, Request for SFH Conditional Commitment

• Useful web links

 Brochures and guides:

• Guaranteed Loan brochure

• A “quick guide” overview to Guaranteed Loans

•  For additional information contact your local Rural Development office. 

Training

• Guaranteed Lender Training

  • MS PowerPoint format   See the notes view for detailed loan program information.

  • "Flash" presentation 

• For additional training, contact your local Rural Development office. 

Find a Rural Development office. 

• The Rural Development Office Locator website is: http://www.rurdev.usda.gov/recd_map.html  

• You can always look us up in the telephone directory blue pages under “United States Department of Agriculture”, and then look for “Rural Development” or “Rural Housing Service.

 What is the Rural Development "guarantee"?

• Lenders have less risk with the Rural Development guaranteed loans than with conventional loans covered by private mortgage insurance. 

Thank you for visiting our web site.  We look forward to working with you as partners in providing affordable housing opportunities in rural areas.  Let us know how we can further serve you.