How could I buy a home using the USDA Program (Rural Development Loan)

Rural Development loans can help you buy this barn



The United States Department of Agriculture (USDA)  has created several loans to help low- or moderate-income people buy, repair or renovate a home in a rural area. Lots of times these loans are referred to as RD loans.  The Veenstra Team has prepared an exclusive Rural Development Home Search which will allow you to see homes for sale which qualify for rural development and where you can be alerted when a new home that qualifies for Rural Development comes on the market.  Sign up for that program here!  

Rural Development Loans come in different “flavors”!

There are a few popular USDA (RD) loans.  Here are a few of the most popular.
1) The single family direct home ownership loan
2) The single family guaranteed home ownership loan,
3) The rural repair and rehabilitation loan or grant
4) The mutual self-help loan.

CLICK HERE and you can request a lender to contact you so you can learn the differences between the USDA loans and discover which is right for you.  

Though the terms and details of these loans differ, all offer very low effective interest rates (some are as low as 1 percent) and RD loans don’t require a cash down payment. To qualify, you do need to have a reasonably good credit history and credit score.   There are a few instances where a credit score lower than 620 may be considered, but those situations are rare and depend on many other factors which a lender can help you understand.

Not all Kalamazoo area properties qualify for USDA loans.  If you want to check whether a home qualifies for an RD loan, you can go the website to put in the address of a property that you are wondering about.

Here are some guidelines take directly from the USDA Eligability documentation.  The guidelines for RD loans can be quite complicated, so the best thing to do is to talk to your lender to make sure you understand the options.

Here is an INCOMPLETE list of the guidelines for RD.  It is critical to talk to a lender so they can determine which criterion apply to your situation.

  • You must be a citizen of the United States or be admitted for permanent residency
  • Non-occupant co-borrowers are not permitted
  • Generally, borrowers must sell their existing home
  • Applicants must have adequate and dependable income, typically with a history of 24 months
  • Part time employment must have a history of no less than 12 months
  • Alimony and child support income must continue for 3 years and have no less than a 12 month history
  • Any income of a non-purchasing spouse must be verified to make sure income limits are not exceeded