USDA Rural Development

The U.S. Department of Agriculture has a purchase-only mortgage loan program (with a streamlined refinance available for current program note holders only). The USDA issues mortgage insurance to private investors to insure against borrower default. Mortgage insurance is financed by borrowers paying an upfront “guarantee fee.” The purpose of the loan program is to encourage the improvement of the housing stock in America’s rural territories among persons with low to moderate incomes.  If not for narrow loan guidelines, this program would be a wildly popular program.

While the majority—even the vast majority—of U.S. territory falls within USDA “rural” territory, few people actually live within this territory. Therefore, while we receive regular inquiries about this loan program, we are rarely able to finance a person under the USDA program. And while the USDA Rural Development program does not have a maximum loan amount, one is constrained by area specific income limits. In addition, there is no USDA refinance program.

To look into property and income limits and eligibility, you may inquire at the USDA Rural Development site.

*Technically, the USDA will insure down to a credit score of 620, but few lenders will lend on a USDA product with a credit score below 640.

**Guarantee fee can be financed into the loan amount.