Guaranteed Rural Housing Loan Program
UNITED STATES DEPARTMENT OF AGRICULTURE RURAL DEVELOPMENT
100% financing. No down payment required.
Property must be located in eligible rural area, typically any town with a
population of 25,000 or less that is not adjacent to a large metropolitan area.
No loan limits or sales price limits
Income limits: 115% of U.S. median (see spreadsheet)
One time 3.5% USDA Guaranteed Fee for purchase transactions and 2.25%
for refinance transactions.
Maximum loan amount is 103.5% of appraised value. USDA fee may be
financed into loan amount regardless of appraised value
Loan can include closing costs if appraisal higher than sales price
No monthly mortgage insurance premium
Loan Submission Highlights
Lender processes loan package using own forms.
USDA Rural Development requires only 1 additional form (RD Form 1980-21)
to be signed by lender and borrower and included in submission package.
Benefits to Lenders
Loans can be purchased by Fannie Mae, Freddie Mac, Ginnie Mae
100% of the loan can be sold
No imposed fee structure on lender for closing costs
Purchase transactions - new construction or existing dwellings are eligible
Existing GRH loans may be refinanced with new GRH loan. Rate reduction only.
Other financing programs including Cal HFA and locally sponsored “silent
second” programs can be used in conjunction with the GRH program.
Interest Rate and Terms
30 year fixed-rate, fully amortized loans only
Interest rate is negotiated between the lender and borrower
2/1 buydown – qualifying ratios at note rate
Site value should not exceed 30% of the total appraised value
One-unit, non-farm, primary residences, including single family dwellings,
condos, and PUDs
Income producing properties are not eligible.
Manufactured homes are eligible if unit is 12 months old or newer and never
occupied. Unit must be placed on permanent foundation and meet all required
of FMHCSS. A builder’s warranty of no less than one year must be issued to the
In-ground swimming pools only when any contributory value given to the pool is
backed out of the loan amount.
Underwriting, Income and Credit Requirements
Qualifying ratios are 29/41. Higher ratios considered with strong compensating
Credit score of 660 or higher considered a strong compensating factor.
Source of income must be adequate and dependable, typically with 24 month
Credit scores of 620 or higher for each applicant results in streamlined
Bankruptcies to be discharged for at least 36 months, unless both applicant’s
credit score is 620 or higher.
Adverse credit waivers may be granted for mitigating factors such as loss of job,
reduction in income and illness
No cash reserves requirement
Borrowers do not have to be first time home buyers
No limit on seller contributions
USDA Rural Development is an Equal Opportunity Lender, Provider, and Employer.
Complaints of discrimination should be sent to:
USDA, Director, Office of Civil Rights, Washington, DC 20250ing