This loan is guaranteed by the US Department of Agriculture and is also referred to as "rural development" or RD loan.
Guaranteed loan benefits include:
Higher Loan–to-Values
No downpayment is required. The maximum loan amount is 100% of the appraised value, plus the one time guarantee fee may be rolled into the loan above the appraised value.
No Monthly Mortgage Insurance (MI)
Mortgage payments without MI allow the borrower to have more available income each month.
Competitive Fixed Interest Rates
Guaranteed loans offer 30 year fixed interest rates.
Guaranteed Housing Loans
Eligibility: Applicants for loans may have an income of up to 115% of the median income for the area. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance. In addition, applicants must have reasonable credit histories.
Approved lenders under the Single Family Housing Guaranteed Loan program include:
Any State housing agency; Lenders approved by: HUD for submission of applications for Federal Housing Mortgage Insurance or as an issuer of Ginnie Mae mortgage backed securities; the U.S. Veterans Administration as a qualified mortgagee; Fannie Mae for participation in family mortgage loans; Freddie Mac for participation in family mortgage loans; Any FCS (Farm Credit System) institution with direct lending authority; Any lender participating in other USDA Rural Development and/or Farm Service Agency guaranteed loan programs.
Terms: Loans are for 30 years. The promissory note interest rate is set by the lender. There is no required down payment. The lender must also determine repayment feasibility, using ratios of repayment (gross) income to PITI and to total family debt.