Guaranteed Rural Housing Loans have been around for some time, and have helped many families and individuals purchase homes in rural areas.
Under the guidelines of this loan program, a "rural area" includes open country and places with a population of 10,000 or fewer people. Under certain conditions, towns and cities with between 10,000 and 25,000 residents may be eligible.
Guaranteed loans can be made either on new or existing homes that are structurally sound and in good repair. There are no restrictions on size or design of the home financed, but it cannot be used to generate income. The loans may be used to purchase or refinance a residence.
No down payment is required on a purchase. The loan amount may be as high as 102 percent of the market value of the home. There is a guarantee fee of 2 percent, which can be included in the loan if the value is sufficient. There is no monthly mortgage insurance required, as is the case on FHA and high loan-to-value conventional loans.
If the appraised value is higher than the sales price, it may be possible to finance closing costs and prepaid expenses in addition to the 2 percent guarantee fee up to the maximum of 102 percent. Sellers are permitted to pay the buyer's closing costs as well.
The buyers must occupy the home as their primary residence. Their income must not exceed the moderate income limits established by the county.
There is an automated income eligibility calculator on the USDA Web site at http://eligibility.sc.egov.usda.gov. This site gives information about eligible property locations as well. To view the map of florida click here
To qualify for this program, borrowers must have a good credit history and verifiable income. They must be U.S. citizens or permanent resident aliens. Guaranteed rural housing loans require that the house payment, including principal, interest, taxes and insurance, should not exceed 29 percent of the borrower's gross income. The total debts, including the new house payment divided by the borrower's gross income, should not exceed 41 percent.
Some exceptions to the qualifying ratios may be made to borrowers with high credit scores, a history of savings or similar current housing expense. Other factors to overcome high ratios may be completion of homebuyer education classes or future income of a spouse or other co-borrower who generally has worked and is seeking employment.
The program does not require that borrowers be first-time homebuyers, but they may not own a home within commuting distance of the home being purchased. Borrowers must be unable to obtain a home loan under other programs requiring a down payment. The loans also may be made to refinance either existing USDA Rural Development Guaranteed housing or their Section 502 Direct housing loans.
The homes being financed through this program must have access from a street, road or driveway, and all streets and roads must be publicly maintained with hard surface. The land cannot be subdivided.