Often referred to as one of the best-kept secrets in the mortgage industry, the U.S. Department of Agriculture, Rural Development (RD), has a zero-percent-down loan program that knocks the socks off the Federal Housing Administration’s loan program. This is the only loan program where if the home appraises for more than the purchase price, you can be approved for the higher appraisal price and roll in some costs, if not all, into your mortgage.
As is usual with any good thing, there are limits. RD has income limits by county. Find this online at https://eligibility.sc.egov.usda.gov/. Genesee County currently has a maximum household income of $78,200 for a family of one to four. The limit increases depending on the number of dependents in the home. Keep in mind this is a household max, so for example, if there is a 16-year-old dependent who works, their income would be included for the household limit even though they are not on the loan.
RD loans (Rural Development Loans) are also are restricted by location. The home being purchased has to be in an RD-eligible area. Do not immediately be concerned that these areas are far away from civilization. Ninety-seven percent of the nation’s land mass is eligible for the RD loan program. Always be sure to double-check the exact address on the above-mentioned website. If it is listed as approved, this will ensure the property is eligible.
Last, even though you still need a minimum credit score of 640 (some lenders can do down to 620), the length of tradelines comes into play. This means you need at least two creditors on your credit report that have reported a minimum of 12 months’ credit history. This program does allow the use of nontraditional credit. For example, a borrower could supply documentation of a consumer energy account for a 12-month period in lieu of a credit account that is reported to the credit bureaus. This exception helps newer borrowers who may not have credit tradelines but have established credit, such as a cell phone plan or car insurance.
As intimidating as it might sound, with the right lender, the process to obtain an RD loan is not complicated. This is a perfect program for first-time home buyers or borrowers in the low to moderate income range. Don’t let the guidelines scare you. Call today to get your RD preapproval.
Learn more by calling 810-732-9660. Cason Home Loans is located at G3404 Miller Road, Flint.