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Guaranteed Home Loans from the USDA

The USDA offers direct loans to borrowers in rural areas for the purpose of purchasing homes. The USDA also offers guaranteed home loans for people who are not eligible for a direct mortgage loan. There are specific income guidelines and eligibility requirements for direct loans and guaranteed loans. If you are not eligible for a direct loan, you may still be eligible for a guaranteed loan.

USDA Loan Requirements

Check out the requirements for the USDA Guaranteed Loan Program:

  • People who apply for a guaranteed home loan from the USDA can make up to 115% of the median income for the area they are in compared to only 80% for the direct loan program. This means that the guaranteed loan program is available to people who have a higher income than is allowed under the direct loan program.
  • The guaranteed loan can be used to purchase a new home, build a home, or purchase a pre-existing home and renovate. The loan money can also be used to upgrade water and sewer requirements for the property.
  • There is a reasonable credit history requirement for the guaranteed loan.
  • People who apply for the loan must also be in need of better housing than what they currently have.
  • People who apply for the USDA guaranteed loan must be employed and show that they can afford their monthly housing expenses. This includes monthly mortgage payments, homeowner's insurance, property taxes, and other costs.
  • To get a guaranteed loan from the USDA, you must go to an approved lender. You can find help with USDA Loans at our sister website.
  • The guaranteed loans are for a term of 30 years at a fixed interest rate set by the lender and based on the current market and other criteria.
  • The home being purchased or built must be modest in size and affordable in cost. If the home is in need of repair, the costs of the repairs can be financed into the loan as long as there is an estimated cost and time frame by which the repairs will be completed.
  • For more information about the USDA Guarantee Mortgage Loan Program for families in rural areas go to the USDA Site

See a related article: Other Government Programs - FHA Home Loans

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