The Rural Housing Program is offered through the USDA, through Direct and Guaranteed financing. We are an approved lender for this program through the Guaranteed side. It is designed to provide financing for properties outside metropolitan areas for the purpose of stimulating those areas for development. Many homes inside the city limits of an area with larger populations will not qualify, but many of its surrounding communities will. The RHD loan is for primary residence ONLY and no other properties can be owned by the applicant. The program offers 100% financing, the seller can pay closing costs up to, and sometimes exceeding, 6%. The loan is based on appraised value and ANY difference of the appraised value and the sales price can also be used for closing expenses. For example, if a property’s sales price is $95,000 and the property appraises at $100,000 then $5,000 can be used for closing expenses or lender required repairs.
Do I Qualify for a USDA Home Loan?
Eligibility varies based on area, your income, credit history, and the number of dependents claimed so it’s important that you call and speak with one of our experts to see if you qualify. Since the program is designed for moderate-income families there are household income maximum limits. Here’s an example of income limits for the number of people in a household:
1-4 people $86,850
5+ people $114,650
These are good guidelines, however, they can allow for more or less depending on the county that the applicant is purchasing the home in. There are adjustments that can be made that will allow for more income qualification. It is important that the prospective applicant speaks with a qualified mortgage specialist to determine these income limitations.
USDA Loans Property Eligibility
Not all properties will qualify, but a great deal will. Depending upon where the property is located is the primary determining factor. Usually, outside of city limits, some of Waco won’t qualify, but areas like Robinson or China Springs are full of eligible property for USDA Financing. For a full map of eligible areas, click here.
Higher populated metropolitan areas are excluded from qualifying for RHD. However, most areas outside city limits will be able to offer for RHD financing. Counties of Texas do qualify with some areas of ineligibility and it is important to remember that while this is a rural development program many of the areas that qualify are very close to city limits.
Property requirements have drastically changed from the past program. Appraisals are required by an FHA approved appraiser and the property must meet HUD minimum requirement. There are no longer the stringent requirements of inspections, minimum insulation requirements, storm windows, solar screens or other tedious property requirements that many times precluded a property from qualifying in days past.