Rural Development loans are great products for moderate to low income families that are looking for a home outside of major cities or just want an opportunity to purchase a home with very little to no cash. Though closing times can be a bit longer do to the strict lending guidelines set by USDA, the rural development loan is one of the only true $0 down loans and a very under-utilized product throughout the US!
A couple of things to note: There are restrictions for both household income and property location. The typical household income limit for most areas in the state of Michigan is $78,200. Click Here to Lookup Eligible Properties and Areas(Any area not highlighted is eligible, just zoom in on MI to see)
Here is the breakdown for USDA-Rural Development Loans: Credit score: 580 and above but optimal buyers are 620-680. Buyers over 680 are allowed increased DTI flexibility. Down Payment: $0 - this is a 100% guaranteed loan backed by USDA. DTI: Below 680: 29/41% caps, above 680: flexibility above 33/44% and higher. Learn More. Term(s): 30 year fixed Mortgage Insurance: None but there is a 1% up front funding fee (can be financed) and a .35% annual guarantee fee (factored in to the monthly payment) Cash Reserves: Typically none required. Appraisals: USDA loans are subject to HUD appraisals (just like FHA) and require higher standards for the health and safety of a property, but this shouldn't discourage buyers or sellers especially if there are no health and safety issues with the house. If you have any specific questions about property conditions please reach out to us.
A couple things to consider:
Household income is different than repayment income, in that it includes any income for those 18 years old and above that will be residing in the new home as their primary residence. This number can't exceed $78,200 for Michigan counties but there are eligible deductions so please contact us so we can help with the calculations.
Closing costs may be financed into the loan amount, as long as there is a cushion between the purchase price and the appraised value. The LTV may not exceed 100% (exception is the 1% funding fee).
If you think you're ready...
Fill out a brief questionnaire and we'll give you a free affordability analysis! We will contact you with the results within 24 hours and help you determine whether you're ready to get pre-approved to purchase a home!