Rural Housing Loans (USDA)
Purpose: To provide low and
moderate income applicants with the financial
assistance to obtain adequate housing in rural
communities with USDA Rural Development guaranteeing
sound loans that could not otherwise be made without
Must have an adequate and dependable income
Must have a credit history that indicates a reasonable
willingness to meet obligations
Must be a U.S. Citizen or be legally admitted
for permanent residence
Must have an adjusted annual family income that
does not exceed the moderate income limit of the
Must have repayment ability based on the
Monthly obligation for mortgage payments, real
estate taxes, and Insurance (PITI) divided by
gross monthly income cannot exceed 29%.
Total Monthly Debt Payments divided by gross monthly
income cannot exceed 41%.
Loan Purposes: Guaranteed loans may be
made on new homes that have been inspected using
code certified plans and specifications or have
ten year warranties. Existing homes that are structurally
sound and pass an Existing Home Component Inspection
(MO RH Guide 11) may be financed. If the home
is on an individual water and sewage disposal
system, it must be approved according to the requirements
of the Division of Health. Funds may be included
in the loan for essential repairs.
Loan Terms: The Lender sets the interest
rate for an amount not to exceed the Fannie Mae
30 year fixed rate plus .6 of 1%. The loan may
be for up to 100% of market value plus up to 2%
for guaranteed fees. USDA Rural Development will
receive a one time fee of 2% for purchases and
.5% for refinances of Rural Development's loans
to guarantee the loan for the original lender.
All loans must be secured by a first deed of trust
on a residential property.
Location and Loan Amounts: The homes must
be located in a rural community with less than
20,000 population, or in open country not closely
associated with an urban area. Maps outlining
rural areas may be obtained from any USDA Rural
Development office located in a county with a
city over 20,000 population. The home may include
typical amenities, except in-ground swimming pools.
Applications: USDA Rural Development approved
conventional lenders originate these loans, process
applications and submit the loans to the local
USDA Rural Development Office for a commitment.