What are USDA RD loans?
USDA RD (rural development) loans are a type of mortgage available for individuals to fund purchasing or repairing a home in an area defined as rural by the United States Department of Agriculture (USDA). The loan is available through private mortgage providers (mortgage companies, banks, and credit unions) and backed by the USDA. Mann Mortgage has been a top rural lender recognized by the USDA for 10 years running.
USDA RD loan quick view
- 0% down payment available
- Low closing costs
- Reduced upfront mortgage insurance premiums
- Up to 6% seller contribution allowed
- Lower credit score qualifying
- Properties must meet USDA guidelines
- Income restrictions apply
- Simple & secure online application
Your Custom USDA RD Loan Rate
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Do you live in a rural area?
The USDA maintains an interactive map to easily identify rural designated areas. Some states, such as Montana, are almost entirely eligible for USDA loans. Get in touch with our team for help determining if you live in a qualifying area. Your loan officer can work with you to locate areas eligible for USDA rural development loans
How is a USDA RD loan different than a conventional loan?
Conventional loans are available to any borrower regardless of where their real estate is located. USDA loans are only available to borrowers in designated rural areas.
Advantages of a USDA RD loan
Loans are available with 0% down payment and credit scores tend to be more forgiving than with conventional loans. USDA loans often offer lower interest rates too.
Disadvantages of a USDA RD loan
Borrowers must meet income restrictions for the county in which they are buying or repairing their home, and the loan can only be used for primary residence dwellings. Although USDA loans don’t require private mortgage insurance, borrowers will need to pay an upfront guarantee fee and an annual fee that serves as a form of monthly mortgage insurance premium. The annual fee is 0.35% of the loan’s annual balance but paid monthly as part of the borrower’s monthly mortgage payment. This fee exists for the life of the mortgage.
Who should consider a USDA RD loan?
People in rural-designated areas and with limited down payments may be a good candidate for a USDA loan. To see whether you should consider a USDA loan connect with your Mann Mortgage loan officer to review financial goals and loan options.
If you’re interested in building a home in Kapolei or accross Hawaii, Mann Mortgage can help you make it happen. Please contact us today or apply online in less than 10 minutes using the secure online application below.