ALL ABOUT
USDA INSURED LOANS
USDA insured loans are popular for many reasons. Backed by the U.S. Department of Agriculture, the mortgage & refinance options available from the USDA Rural Development Guaranteed Housing Loan Program were designed to offer financial assistance to those in rural America.
ABOUT THE USDA AND USDA INSURED LOANS
What is the USDA?
The United States Department of Agriculture, also known as the USDA or simply the Agriculture Department, is the federal executive department in charge of farming, forestry and rural economic and food in the USA. This gives the organization a wide legal reach, as they are solely responsible for developing and executing the federal laws related to these industries. With a goal to assist U.S. farmers, ranchers and all of those in agricultural trade or production, the USDA ensures that Americans have safe food, protected natural resources and strong rural communities. Beyond the financial aid given through USDA home loans, the Agriculture Department is a member of the United States Interagency Council on Homelessness, due to their experience on the trials and tribulations of the poor rural Americans.
What Does an "Insured" Loan Mean, Exactly?
Unless if applying for a direct loan from the USDA, it is important to understand that the Agriculture Department, or the government in any capacity, is not loaning you the money to buy or refinance your house with a USDA insured loan. With a USDA Insured Loan, the U.S. Department of Agriculture is putting a guarantee behind you, telling the lender that if you happen to default on your mortgage, they will receive a portion of their loan back from them. This government backing is why the requirements for a USDA loan are often less than other loan types, although individual requirements do vary by lender and on a case by case basis. You could almost think of it as the government co-signing for your home; wouldn't you be a lot more likely to lend someone 20 bucks if Uncle Sam guaranteed you'd get your money back either way?
USDA PROGRAMS & GUIDELINES
If there's one thing that is true in the world of finance, it's that things are constantly changing. If you're looking for more information about the various USDA loan programs currently available or the USDA guidelines for those options, your best bet is to talk to someone whose job it is to keep up on these sorts of things. However, below you will find basic information on some of the more popular mortgage loan programs the USDA backs.
Single Family Housing Guaranteed Loan Program:
What is this program?
The USDA Single Family Housing Guaranteed Loan, also known as a Section 502 Guaranteed Loan, is designed to assist low to moderate income borrowers in rural America an opportunity to own their own home. For those who are eligible, home purchases, construction, rehabilitation, improvement or relocation is possible with up to 100% financing. Approved lenders are promised a 90% loan note guarantee to reduce the risk of extending 100% loans to rural homebuyers. This mean that with a USDA loan, there is no money down for those who qualify.
Who is eligible for this program?
Applicants must:
- Meet the USDA income-eligibility requirements
- Agree to occupy the dwelling as a primary residence
- Either be a U.S. Citizen, a U.S. non-citizen national or a Qualified Alien
What is an eligible rural area?
Visit the Rural Development Single Family Housing Guaranteed Loan Program MAP
Why does Rural Development do this?
The USDA gives lenders the ability to approve loans for low to moderate income families and households living in rural America. When people are presented with affordable opportunities to become a homeowner, the prosperity of a community grows, which in turns creates stronger economies throughout all of America.
Single Family Housing Direct Home Loans:
What is this program?
Also called the Section 502 Direct Loan Program, this program is specifically for low and very low borrowers, those who may not normally receive a mortgage loan, obtain homeownership in rural areas.
Who is eligible for this program?
Those wishing to obtain a direct loan from the USDA must have an adjusted income that is at or below the applicable low-income limit for the area where they hope to purchase a house. They also must demonstrate a willingness and ability to repay debt, i.e., paying bills/rent on time.
Applicants must:
- Borrower must be without a safe and sanitary housing situation
- Borrower must occupy property as primary residence
- Must be legally capable to incur a loan obligation
- Applicant must meet U.S. citizenship or eligible noncitizen requirements
- Nobody suspended from or debarred from participation in federal programs is eligible
Properties financed with direct loan funds must:
- Generally be 2,000 square feet or less, varying slightly by region
- Dwelling & property have market value in excess of the applicable area loan limit
- No property with an in-ground swimming pool(s)
- Land may not be designed for income producing activities
- Borrowers must repay all or a portion of the payment subsidy incurred over the life of the loan when property's title transfers or when the borrower is no longer living in the structure.
What are the eligible areas?
Visit the Rural Development Single Family Housing Direct Loan Program MAP
How much is the down payment?
Typically, no down payment is required with a USDA loan. Applicants with assets higher than the asset limits may be required to use a portion of those assets.
Is there a deadline to apply?
No, applications are accepted through your local RD office year round.
How long do applications take to process?
Depending on a wide varety of factors, processing times will vary based upon on funding availability and program demand in the area in which a potential borrower is interested in buying, as well as the completeness of the application package itself.
Why does USDA Rural Development do this?
By enabling low to very low income Americans and qualified non-residents a path to homeownership in rural areas, it furthers prosperity across small towns and counties cross the country. Over time, this ensures economically strong communities stay strong and financially weak communities become more secure monetarily.
Multi-Family Housing Programs:
The USDA has a wide variety of loan programs for multi-family homes, including:
- Farm Labor Direct Loans & Grants
- Housing Preservation & Revitalization Demonstration Loans & Grants
- Housing Preservation Grants
- Multi-Family Housing Direct Loans
- Multi-Family Housing Loan Guarantees
- Multi-Family Housing Rental Assistance
For more information on any of these programs, please contact us today.
About Coastal Funding
In business for over 20 years, Coastal Funding Corporation is known for our determination to acquire as many lending partners as possible. We understand not every loan program fits every person, and on top of that, every lender has their own specific requirements, meaning the more options we have at our disposal to match you up with, the more likely you are to find not just a loan, but the right loan.