With conventional interest rates rising rapidly, financing a home purchase is harder than ever for homebuyers right now. Here’s some good news: A USDA Rural Development Home Loan is a home loan insured by the United States Department of Agriculture, that provides 101% financing and is designed to promote homeownership in less-densely populated communities. This type of loan is a great option for people just starting out, or those having difficulty saving for a traditional down payment.
What is the Rural Development Loan Program?
The Section 502 Guaranteed Loan Program assists approved lenders (like Bank of St. Francisville) in providing low- and moderate-income households with a pathway to own adequate, decent, safe, and sanitary dwellings as their primary residence in eligible rural areas. Eligible applicants may purchase a dwelling in a qualifying rural area, and may be able to receive up to 101% financing. Best of all? No down payment is required.
Who Qualifies for A Rural Development Home Loan?
• Households with 1-4 people with a maximum income of $103,500 or households of 5-8 members with a maximum income of $136,500. Household income includes part-time salaries of teenagers ages 16+ and salaries of people whose names aren’t on the loan.
• The applicant must be classified as a U.S. citizen, U.S.non-citizen national, or a Qualified Alien, and must dwell in the home as a primary residence.
• This is a fixed-rate loan; applicants must have a minimum credit score of 620.
• Borrower cannot have more than 20% down payment plus closing costs to meet the asset threshold.
Where does the property need to be located to qualify?
You might be surprised to learn what addresses and areas qualify as “rural” for the purposes of this program (many areas in and around the Baton Rouge area qualify). Property eligibility for the Rural Development Home Loan program can be determined with the USDA’s rural housing maps tool. CLICK THE LINK HERE and enter an address to find out whether your area qualifies.
What are the advantages of this program?
• A Rural Development Home Loan may be used to purchase a primary residence.
• The interest rate for a Rural Development Home Loan can be lower than the interest rate on a conventional Fannie Mae or Freddie Mac loan.
• Qualified applicants may be eligible to receive up to 101% financing.
How do you get started?
Interested in a Rural Development Home Loan? Connect with Consumer Mortgage Loan Officer Angelice Fried at (225) 784-3166 or angelice@bsf.net to get started. The loan application is also available online HERE.
