Guaranteed

Rural

Housing Loans

United States

Department of

Agriculture

Rural Development
This program is administered by USDA Rural

Development, which serves the public through

more than 800 field offices nationwide.

Sometimes a good credit history and steady

income are not enough to qualify for a home loan

with a commercial lending institution, community

bank, mortgage loan company, or mortgage

broker.

More rural families and individuals may be

eligible to become homeowners with the help of a

USDA guaranteed home loan. When the Federal

Government guarantees a loan, lending institutions

can assist buyers with reduced risk. USDA's Single

Family Housing Guaranteed Loan Program may

assist lenders to extend mortgage loans with

affordable terms to low- and moderate-income

homebuyers.

Guaranteed Rural Housing Loans

To be eligible, applicants must:

n Have an adequate and dependable income;

n Be a U.S. citizen, qualified alien, or be legally

admitted to the United States for permanent

residence;

n Have an adjusted annual household income that

does not exceed the moderate income limit
established for the area where the home is

located. Eligible adjustments are allowed for

dependents, elderly households, annual child

care expenses, and qualifying medical and/or

disability expenses. USDA Rural Development

offices can provide applicants with information

on income limits for their area and assist them in

calculating household income. An automated

income-eligibility calculator is available online at:

http://rdeligibility.usda.gov;

n Have a credit history that indicates a reasonable

ability and willingness to pay debt obligations as

they become due;

n Meet repayment ability based on the following

qualifying ratios:

1. Principle, Interest, Real Estate Taxes, and

Homeowners Insurance (PITI) of 29 percent of

the gross monthly income.

2. Total Debt (TD) consists of the PITI and all

additional monthly debt obligations (i.e.,

installment loans, credit card payments, student

loans, etc.) of 41 percent of the gross monthly

income. Exceptions to exceed the qualifying

ratios may be granted by Rural Development

upon approved lender request.

Homes That Qualify

n Existing, modular, or new construction homes are

eligible. New manufactured homes may be

eligible; contact Rural Development for more

information;
n Existing homes must be structurally sound,

functionally adequate, and in good repair;

n There are no restrictions on the size or design of

the home;

n The home must not be used for incomeproducing purposes, nor may it include buildings

or other accessories that produce income;

n Homes must be located in eligible rural areas.

USDA Rural Development field offices determine

eligible areas. Rural areas may be identified by

mapping an exact address or viewing individual

counties by State online at:

http://rdeligibility.usda.gov.

Highlights of the USDA Guaranteed 

Rural Housing Loan Program

n Loans may be guaranteed up to 100 percent of

the appraised value; a portion or all of the

upfront guarantee fee may be financed above

market value. No downpayment is required;

n An annual guarantee fee is collected while the

loan is in repayment status. The fee is included as

part of the borrower’s monthly payment;

n Thirty-year fixed interest rates apply and are

agreed upon by the lender and applicant.

Maximum interest rates apply;

n Loans may include eligible closing costs, legal

fees, title services, pre-paid items, and the cost to

establish an escrow account for real estate taxes,

homeowners insurance, and/or annual fees if the

appraised value is higher than sales price;

n Sellers may contribute to the buyer's closing

costs;

n Homebuyers may apply with a participating

approved lender of their choice;

n Buyers must occupy the dwelling as their primary

residence;

n Refinance transactions are allowed for USDA

Section 502 guaranteed or direct housing loans;

n Guarantee fees may be financed into the loan or

paid at loan closing by the borrower, seller,

builder, or eligible gift/grant funds;

n Lenders may use secondary market sources,

including Fannie Mae, Freddie Mac, Ginnie Mae

pools, and participating State housing agencies;

n Guaranteed loans are subject to the provisions of

the Civil Rights statutes, including the Equal

Credit Opportunity Act.
We're Here to Help

Interested home buyers should call or visit an

approved lender of their choice to apply for

mortgage financing. USDA Rural Development’s

field offices can provide more information about

the guaranteed loan program, as well as a list of

approved lenders that participate. Lenders

interested in becoming approved to participate in

the program may also contact USDA Rural

Development for further information. USDA offices

are listed in the government section of the

telephone book under "United States Government,

Department of Agriculture." Rural Development

State offices may be contacted at 1-800-670-6553,

then press 1 and follow the prompts to be

connected.

Please visit the Rural Development Web site for

additional information at:

http://www.rurdev.usda.gov/rhs/. 

Or write:

USDA Rural Development 

STOP 0701 

1400 Independence Ave. SW 

Washington, DC 20515-0701
Program Aid 1501

October 1999

Slightly Revised June 2013

The U.S. Department of Agriculture (USDA) prohibits discrimination

in all its programs and activities on the basis of race, color, national

origin, age, disability, and where applicable, sex, marital status,

familial status, parental status, religion, sexual orientation, genetic

information, political beliefs, reprisal, or because all or part of an

individual’s income is derived from any public assistance program.

(Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA’s TARGET Center at (202) 720-2600 (voice and TDD). To

file a complaint of discrimination, write to USDA, Director, Office of

Civil Rights, 1400 Independence Avenue, S.W., Washington, D.C.

20250-9410, or call (800) 795-3272 (voice) or (202) 720-6382 (TDD).

USDA is an equal opportunity provider and employer.