This loan program is administered by the Rural Housing Service (RHS), an agency within the Rural Development mission area of the U.S. Department of Agriculture.

More rural families and individuals may be eligible to become homeowners with the help of a U.S. Department of Agriculture (USDA) / Rural Housing Service guaranteed loan. Sometimes good credit and a steady income are not enough to qualify at a commercial lending institution like a bank or savings and loan. A sizeable down payment may also be required. When the Federal Government agrees to guarantee a loan, lending institutions can help buyers while incurring less risk.
Through the Guaranteed Rural Housing Loan Program, moderate-income people can qualify for mortgages and even a down payment.

To be eligible, applicants must:

• Have an adequate and dependable income
• The applicant must be a U.S. citizen or a legally admitted alien.
• The applicant’s adjusted annual income cannot exceed the appropriate moderate income limit in Exhibit C of RD Instruction 1980-D. (Call your loan expert to see if your income is eligible, 588-4473)
• The applicant must have a credit history which indicates a reasonable ability and willingness to meet obligations as they become due.
• The applicant cannot have had a previous RD loan which resulted in a loss to the government unless RD determines the loss was beyond the applicant’s control.
• Have repayment ability based on the following ratios.
• The applicant cannot presently own a dwelling which is in the local commuting area and is structurally sound, functionally adequate and large enough to accommodate the needs of the applicant’s household.
• The applicant cannot be delinquent on any tax or non-tax debts and there can be no judgment liens against the applicant’s property for a debt owed to the Federal Government.

Does my home (I want to purchase) qualify?

• Guaranteed loans can be made on either new or existing homes.
• Existing homes must be structurally sound, functionally adequate, and in good repair
• There are no restrictions on the size or design of the home financed
• The home must not be used for income producing purposes
• Typical amenities, except in-ground swimming pools, are allowed
• Homes must be located in rural areas. Rural areas include open country and places with a population of 10,000 or less and, under certain conditions, towns and cities with between 10,000 and 25,000 residents. USDA Rural Development field offices can determine eligible areas.

Highlights of the 502 Single Family Housing Program

• Home buyers complete an application with a participating lender
• Buyers must occupy home, new or existing single family homes, condos, & PUDs. No log homes or non warrantable condos.
• Mortgages are 30 year fixed rate at market interest rates
• Rates competitive with FHA and conforming.
• Loans may be up to 100 percent of market value or for the acquisition cost whichever is less
• Loans may include closing costs, guarantee fee, legal fees, title services, cost of establishing an escrow account, and other prepaid items provided the appraised value is higher that sales price. Buyers are responsible for any other fees or related costs (discount points) required by the lender or not covered by the appraised value
• A one time guarantee fee of 1 percent of the loan amount is charged to the lender, but may be passed on to the applicant
• There is no limit on the seller's contribution to closing costs
• Gift Funds from family, friends, municipality, or non-profit organization permitted for closing cost & pre-paids.
• Guaranteed loans are subject to the provisions of the Civil Rights statutes, including the Equal Opportunity Act.
• Rate & term refis permitted with restrictions
• Borrower may not have more than 20% of purchase price in liquid assets.
• No non-occupant co-borrowers

Call your Loan expert at Mortgage Investors of Knoxville to see if your home and income qualify.

No obligation, free consultation. For More Information, call 865-588-4473.