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Major metropolitan cities and even some outlying towns often have more of the focus of government on their housing needs. As such you will find taxpayer funded development grants, second mortgages and other forms of buyer assistance rather widely available. In Georgia there are dozens of buyer incentive programs including down payment assistance grants and loans available to residents in most large cities.

Out in the rural areas away from the high demands of in town living however housing often seems to be an afterthought. This is where the federal government, in the form of Section 502 Guaranteed Rural Housing loan guarantees comes into play. With USDA GRH home loans there is no separate, second loan. There is no grant to qualify for. There is simply this one loan, great rates, moderate qualifications and no down payment.

No down payment?

Because the federal government uses a taxpayer funded program in Section 502 to guarantee the repayment of these rural housing loans lenders are much more comfortable approving these loans with no down payment (no money down) than they are even many conventional loans requiring 20% or more down payment.

While their are some changes in the works the USDA GRH loan has not had any extra monthly fee like FHA and only required a separate funding fee to be paid at the time of closing. With changes in the works the final rules on the 2010 version will be out soon but there still will be no required minimum down payment. Even FHA, currently one of the most used mortgage solutions in the industry, requires 3.5% down on the purchase of non-HUD owned homes.

Who qualifies and how do you know?

Qualifications for the USDA GRH loan is very similar to qualifying for FHA except the maximum income must not exceed 115% of the median income for the area. You can check the limits for your area at the USDA single family guaranteed website.

USDA rural housing loans are only for primary residences and the home must be in livable condition as determined by the appraiser. Rehabilitation costs cannot be included in the loan but may be escrowed and repairs made according to the guidelines with a limit of $5000 in total costs. Those repairs must be completed and pass a final inspection within 7 days.

There aren’t many shopping choices with the guaranteed rural housing loan for the home buyer looking for something other than a “plain Jane” home loan. USDA rural housing loans are 30 year fixed interest rates and no other options are available at this time.

While loans for new manufactured housing which has been permanently installed the loans may not be guaranteed for existing manufactured housing unless that housing is financed by an existing USDA GRH loan. Some lenders may still not offer the loan on manufactured housing but USDA does offer the guarantee on new manufactured housing.

Housing financed with the USDA home loan must be in a designated rural area. To see if the property you are interested in purchasing or selling you may visit the USDA single family website and search property eligibility.

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