USDA Rural Development Loans

USDA Loan Application | USDA Interest Rates |  USDA Streamline Refinance |

Want to buy a rural home?  Like No Down Payment? Then this mortgage loan is for you!

The US Department of Agriculture administers a means tested mortgage loan guarantee program called the USDA Rural Development Loan. Commonly referred to as just a USDA Loan, RD, or Rural Housing loan.

This USDA loan is designed to provide low cost housing for those wanting to live in rural areas, and is primarily for first time home buyers, although you do not need to be a first time home buyer to use this program.

Prospective home buyers in MN, WI, IA, ND, SD, CO, FL, AZ can apply for a USDA Home Loan right on this web site.

You DO NOT need to go to a bank or through a USDA office to get this loan.

This is not a “farm” loan. You can not use it to buy a farm. Rather it is a mortgage loan that is designed to support housing in rural communities. Not all “rural” areas are in the middle of a cornfield. Many areas of Minnesota, Wisconsin, Iowa, North Dakota, South Dakota, Colorado, and Florida all qualify for USDA financing.  Our USDA Loan Experts will be happy to help you determined if the house you want to buy is in an eligible area.

• Zero down payment required - You can finance 100% of the purchase price
• Roll your closing costs into the loan (known as seller paid closing costs, or get seller paid closing costs)
• Very cheap mortgage insurance compared to other mortgage loans options
• Homes more affordable, and more people qualify because of low mortgage insurance (PMI)
• Good credit or better required - Doesn't need to be perfect, but bad credit not OK (over 620 required)

1. Do a USDA Income Eligibility check. Does you household income qualify
2. Do a USDA Property Location Eligibility check. Is the house in an eligible rural area?

If you meet household income, and property location eligibility, the:

Fill out an online USDA Loan Application. Get lender pre-approved in a few business hours.

Basic USDA Loan Requirements

USDA Income Limits: 

All USDA loans in MN, WI, IA, ND, SD, CO, and FL have household income limits to qualify. The loan is a "means tested" program, which states that you or your family can't make too much money. There are allowable income adjustments for minor children (family size), child care expenses, and elderly family members. Most moderate to middle income families WILL qualify. You can easily check income limits for your family size, state, and county on the USDA Loan income eligibility web site.

USDA Rural Areas Only:

Basically, a rural area for the USDA loan is anything outside a major metropolitan area. This may be closer to the big city than you think, so be sure to check the property eligibility map to make sure the area you wish to buy a home fits USDA's property location guidelines.

No Down Payment Required:

Unlike conventional loans and even FHA loans, USDA Home Loans do not require any down payment (you can put money down if you want). This is especially beneficial for first time home buyers. Saving up a down payment can be very difficult. Utilizing a USDA Home Loan means that is no longer an issue.

House Price Limit: 

The maximum purchase price of the house you can buy with a USDA loan will vary by the State and County the property you wish to buy is located. As this is ever changing, please contact us at (651) 552-3681, click here to quickly send us a question, or just click the Chat icon in the bottom corner (if available) and we'll look up the current information for you.

Type of Home: 

The home must be on a publicly maintained road, or in a development with private roads. It must be a single family home (no duplexes), must be owner occupied (no investment homes), and may not produce income.

Properties that have a significant number of building other than the home itself, such as pole sheds, old barns, and old silo's can be an issue with the USDA Loan, so be sure to contact us to discuss any questionable properties BEFORE signing a purchase agreement.

No Business can Operate on the Property. 

A hobby farm, where maybe you have a couple of chickens and a horse is OK, but agricultural land that is getting farm income (even from renting part of the land), or any property that will be farmed is not OK.  You also can not buy a multi-family home where you would be renting out any units.

USDA Loan Closing Costs: 

All mortgage loans have closing costs. Lender fees, appraisal, credit report, title company, state taxes, origination fees, and more. These are the buyer costs that need to be paid at closing. The best way is always for the buyer to pay cash.  But as most first time home buyers have limited funds, so this can be a problem. If you are short, here are a few options to come up with the money:

401k / Gifts

Borrowing a little bit of money from your 401k program, or the gold old gift from Mom and Dad are both very popular.

Sellers Concession:

A sellers concession, commonly called "seller paid closing costs" allows the seller to pay for some (or all) of your closing costs out of their proceeds from the sale of the home. Couple that with 100% financing that is available, and many people can be in a home without any of your own money,* meaning you can keep your money in savings to cover any expenses that arise.

Financed Closing Costs:

On some purchase transactions, foreclosures and short sales in particular, a sellers concession is not possible. A USDA Home Loan allows the financing of the closing costs even if the seller will not agree to a sellers concession. All of the closing costs (except discount points) can be financed, up to 100% of the appraised value of the home. This is extremely beneficial when a sellers concession is not an option, but is hard to depend on, because we don't know if it is available until AFTER the appraisal is completed.

The next "financed" option is by taking a higher interest rate.  For example, if you take the current interest rate and increase it about 1/2%, the lender can eliminate most, if not all your closing costs.

Closing Cost Assistance Loans

Down payment and closing cost assistance loan may also be available in combination with your no down payment USDA loan. Be sure to ask your Cambria Mortgage Loan Officer about this option.

USDA Loan Interest Rates:

USDA Rural Development Loan Interest Rates generally run about 1/8th to 1/4% lower than conventional mortgage loan interest rates, adding to the benefit of using a USDA loan to buy your home. As with all mortgage loans, the USDA loan interest rates can and do change on a regular basis.

USDA loan interest rates, just like all mortgage programs will vary for each individual person based on your unique situation, credit score, etc.  Complete our free, no obligation Quick Qualifier form, to get a personalized Loan Estimate sent directly to you based on your exact situation. 

Better yet, complete a full USDA Loan Application, and let one of our licensed USDA loan Experts review your full application to determine qualifications, and what your actual interest rate may be.

If you have any of the following items, you will not qualify for the USDA loan in MN, WI, IA, ND, SD, CO, FL.  BUT, you may qualify for other loans (like an FHA loan), so don't hesitate to call. We'll review your application to see all the programs your qualify for!

• Poor Credit (middle credit score BELOW 620)
• Delinquent Government Debt (back taxes, student loans)
• More than 2 late mortgage or rent payments in the past 12 months
• Any credit account turned into a collection account in the past 12 months
• Unpaid Tax Liens (must be paid off to buy)
• Foreclosure less than 3-years old
• Bankruptcy Chapter 7 less than 3-years old
• Bankruptcy Chapter 13 less than 1-year old
• You have more than 20% of the purchase price in the bank (this does NOT include retirement accounts like a 401k)

DON'T QUALIFY FOR A USDA Loan?  

There are other home loan possibilities. DON'T ASSUME you can't qualify for something else.

Don't be afraid to simply call (651) 552-3681 to discuss your personal situation. For example, with an FHA loan, a bankruptcy only needs to be two-years old, and we can offer loans with a credit score of 620. We also offer down payment assistance loans, that require only as little as $1,000 of your own money. If you are active military or a Veteran, a VA Home Loan only requires two-years past a foreclosure or a bankruptcy.

USDA Streamline Refinance

If you have an existing USDA loan in MN, WI, IA, ND, SD, CO or FL, you are eligible to refinance your home to a lower interest rate just like any other loan, with a streamlined process. 

The biggest benefit of the USDA streamline refinance is there is NO APPRAISAL REQUIRED, but you do need to be lowering your interest rate at least 1%, and the closing costs can not be rolled into the new loan amount like you can with other refinances.

You either have to pay them out of pocket, or the lender can roll them into the loan, but we do so by increasing the interest rate.  Because of this, for most people, it may make more sense to do a standard conventional loan refinance if possible.

* While many people are able to make this option work, it does require the participation of the home seller to be successful. Seller participation is not guaranteed.