Everything You Need to Know About the Single Family Home Guarantee Loan Program

Offers loan guarantees to approved lenders providing financing to individuals and families with low or moderate income to obtain safe, clean, modest, affordable homes in rural areas. Reduces the risk to lenders, allowing them to extend 100% financing to eligible homebuyers who are unable to secure credit from other sources. Loan funds may be used to:

Loan amounts are determined by the market value, purchase price and acquisition costs of the property, including closing costs and reasonable/customary expenses associated with the purchase.

Interest rates vary and are determined by individual lenders. The program offers 30-year fixed rate loans only, and there is no down payment or minimum credit score required to receive a loan.

The single family home guarantee loan program is an incredible opportunity for eligible borrowers to achieve the dream of homeownership. With this program, you can purchase, build, rehabilitate or relocate a home in rural America with 100% financing and no down payment.

What is the Single Family Home Guarantee Loan Program?

The single family home guarantee loan program is administered by the U.S. Department of Agriculture’s (USDA) Rural Housing Service. It assists low- to moderate-income households living in rural areas obtain affordable home financing through USDA approved lenders.

Here’s how it works

The program provides a 90% loan guarantee to approved lenders to reduce their risk of extending 100% financing to eligible rural homebuyers, This eliminates the need for a down payment
You apply for the loan through participating lenders approved by USDA. The lender handles the entire application process and loan closing, working with USDA to guarantee the loan.
USDA guarantees the loss to the lender up to 90% of the original loan amount. This incentive allows lenders to provide 100% financing to creditworthy low- to moderate-income rural borrowers.

The bottom line – with a USDA single family home guarantee loan you can achieve homeownership with no money down if you qualify!

What Are the Benefits?

This program offers several compelling benefits:

No Down Payment Required: Recipients can finance 100% of the home purchase price plus closing costs.
Fixed Interest Rate: The loan offers a low fixed interest rate for 30 years.
Flexible Credit Guidelines: There are no minimum credit score requirements. Your lender reviews your willingness and ability to manage debt.
No Maximum Income Limits: Income can be up to 115% of the median household income for the area.
Low Monthly Mortgage Insurance: An upfront guarantee fee and annual fee as low as 0.35% and 0.50% replace mortgage insurance.
No Prepayment Penalties: The loan can be paid off early with no prepayment penalties.
Construction Loans Available: Single-close construction-to-permanent loans are offered to build a home.
Refinancing Options: Current USDA loan holders may be eligible to refinance into a new guaranteed loan.
Wide Range of Home Types: Existing homes, new homes, modular homes and manufactured homes on private property are eligible.
Home Improvements Included: Purchase price can include repair and rehabilitation costs.

What Are the Eligibility Requirements?

To qualify for a USDA single family home guarantee loan, applicants must meet certain eligibility standards:

Location in an Eligible Rural Area: Home must be located in a rural community as defined by USDA property eligibility tools.
Citizenship: Applicants must be U.S. citizens, U.S. non-citizen nationals, or qualified aliens.
Income: Total household income must be 115% or less of the median income for the area.
Credit History: Applicants should demonstrate a willingness and ability to manage debt. No minimum credit score.
Homebuyer Education: Completing a homebuyer education course is recommended but not required.
First-Time Homebuyers: Priority may be given to first-time homebuyers when funds are limited.
Primary Residence: Home must be used as your primary residence.

In addition, the home must meet USDA minimum property standards and lenders must follow program guidelines.

How Much Can You Borrow?

USDA single family home guarantee loans do not have maximum loan limits. How much you can borrow depends on your income, assets, debts, credit history and ability to repay the loan as determined by your lender and USDA requirements.

In general, your total monthly mortgage payment including principal, interest, taxes and insurance (PITI) should be 29% or less of your gross monthly household income. Your total monthly debt including PITI plus other monthly debt payments should not exceed 41% of gross monthly income.

Within these parameters, you may be able to finance up to 100% of the home’s purchase price plus closing costs. The final loan amount will be approved by your lender according to program guidelines.

What Are the Mortgage Rates and Terms?

USDA single family housing guarantee loans offer:

Competitive fixed interest rates negotiated with your lender
30-year loan term
No prepayment penalties

Loans with terms less than 30 years or adjustable rates are not permitted. You must qualify at the note rate without any temporary buydowns.

The interest rate cannot exceed the Fannie Mae 30-year, 90-day commitment rate on the date your loan is locked plus 1% rounded up to the nearest 0.125%.

How Do You Apply?

To get started, follow these steps:

Check Your Eligibility: Use USDA’s property eligibility and income limit tools to confirm you meet requirements.
Find a Lender: Search for USDA-approved lenders in your state using USDA’s lender list. Compare options.
Apply for Preapproval: Choose a lender and complete their loan application and documentation.
Get Preapproved: The lender will process your application and documentation, then issue a preapproval letter if approved.
Make an Offer: With preapproval in hand, you can confidently make an offer to purchase a home.
Final Approval: The lender completes underwriting and submits your final package to USDA for approval.
Close on Your Home: After USDA issues a loan note guarantee, attend the closing to get the keys to your new home!

Get started today by contacting USDA-approved lenders in your area to find the right loan program and interest rate for your budget. The lender will guide you smoothly through the entire application and approval process.

Homebuyer Education Can Help You Succeed

Completing a homebuyer education course before purchasing your home is highly recommended. These programs better prepare you for homeownership responsibilities and challenges.

Many non-profit organizations offer free first-time homebuyer training and counseling programs both online and locally. Your lender may also provide homebuyer education options.

Gaining homebuying knowledge and skills can help you:

Successfully navigate the home buying process
Avoid costly mistakes
Improve your credit and financial management
Prepare for homeownership duties
Build confidence in your decision to buy

Investing in homebuyer education now can set you up for long-term success as a homeowner.

Be a Confident Home Shopper with USDA Backing

The USDA single family home guarantee loan program opens the door to affordable homeownership for rural residents. With a government-backed loan requiring no down payment, you can shop for your dream home with confidence.

Follow the steps above to check your eligibility and connect with USDA-approved lenders in your area. They will guide you from preapproval to closing, making your path to homeownership with an affordable USDA loan simple and stress-free.

The USDA single family home guarantee loan program provides a golden opportunity to turn your goal of owning a home into reality. Now is the time to get started!

What This Program Funds

Buildings and Facilities • Capacity Building

Contact a Single Family Housing Guaranteed Loan Program nationally approved lender of your choice to discuss specific loan terms and start the application process.

Applicants are encouraged to contact their preferred private or state-based lender to learn if they are an approved lender with USDA Rural Development. Applicants are also encouraged to compare lenders in order to find the best available service and financial options for their loan.

For program questions: Contact your preferred Single Family Housing Guaranteed Loan Program nationally approved lender

Buying a House Using USDA Rural Development Loan ($1,000 DOWN)

What is a USDA single family housing guaranteed loan?

USDA Single Family Housing Guaranteed Loans may allow community banks to expand their customer base among borrow – ers in rural communities with incomes below 115 percent of AMI (as defined by USDA). USDA offers up to a 90 per – cent guarantee. Single Family Housing Guaranteed Loans offer competi – tive pricing and terms.

What is a single family housing program?

Rural Development’s Single Family Housing Programs give families and individuals the opportunity to buy, build, or repair affordable homes located in rural America. Eligibility for these loans, loan guarantees, and grants is based on income and varies according to the average median income for each area.

How do I apply for a single family housing guaranteed loan?

Contact a Single Family Housing Guaranteed Loan Program nationally approved lender of your choice to discuss specific loan terms and start the application process. Applicants are encouraged to contact their preferred private or state-based lender to learn if they are an approved lender with USDA Rural Development.

What is a USDA guaranteed loan program?

The U.S. Department of Agriculture’s (USDA) Single Family Housing Guaranteed Loan Program (Guaranteed Loan Program) is designed to serve eli-gible rural residents with incomes below 115 percent of area median income or AMI (see USDA definition in overview) who are unable to obtain adequate hous-ing through conventional financing.

What are the requirements for a single family home loan?

The property must be in an eligible rural area, and borrowers must meet household income requirements that vary by location and household size. The USDA offers the Single Family Housing Direct Loan through the Section 502 Direct Loan Program to help low-income families buy, build, or fix up small homes in rural areas.

What is a home loan guarantee?