Together, America Prospers

Single Family Home Loan Guarantees

What does this 

program do?

This no downpayment, 

100% financing program assists 

approved lenders in providing 

low- and moderate-income 

households the opportunity to 

own adequate, modest, decent, 

safe and sanitary dwellings as 

their primary residence in eligible 

rural areas. 

Eligible applicants may purchase 

existing homes (which may 

include costs to rehabilitate, 

improve or relocate the dwelling) 

or build new. 

USDA provides a loan note 

guarantee to approved lenders, 

encouraging participation by 

minimizing their risk.

This program is NOT restricted 

to first-time homebuyers.

Who may apply for this program?

Applicants must:

• Have a household income that 

does not exceed 115% of median 

household income.*

• Agree to occupy the dwelling as 

their primary residence.

• Be a U.S. citizen, U.S. non-citizen 

national, or Qualified Alien.

• Be unable to obtain conventional 

financing with no private mortgage 

insurance (PMI).

• Not be suspended or debarred from 

participation in federal programs.

What properties are eligible?

• Must be located within an eligible 

rural area.* 

• Must be a single-family dwelling 

(may include detached, attached, 

PUD, condo, modular, and 

manufactured).

• Must meet HUD 4000.1 

minimum standards.

• No set maximum purchase 

price (based solely on applicant 

repayment ability).

• No set acreage limits. Must be 

common for the area.

• No seasoning requirements 

(“flipped” properties allowed).

What are applicant qualifications?

• Income. Non-Self-Employed:

One-year history required.

Self-Employed and Seasonal:

Two-year history required.

• Assets. No downpayment or 

reserves required.

• Credit. Must demonstrate a 

willingness and ability to repay 

debts. No set score requirement. 

Alternative credit allowable for those 

with no traditional credit.

• Monthly housing payment. Total 

payment (principal, interest, taxes, 

insurance, HOA dues, RD annual 

fee) typically should not exceed 

29% of gross monthly income.

• All monthly debt payments. All 

payments included on credit report, 

including proposed new mortgage 

payment, typically should not exceed 

41% of gross monthly income.

Student loan payments. Fixed 

payment: use actual payment or 

1% of loan balance. 

Non-fixed payment (IBR, graduated, 

adjusted, etc.) plans: Use 0.5% of 

loan balance.

• Seller (or interested party) 

contributions. Not to exceed 6% of 

sales price.

• Gift funds. No limit.
Single Family Home Loan Guarantees

What types of loan products 

are available?

• Purchase existing or build new with the 

Single-Close construction program.

• Current USDA Rural Development 

loan holders can take advantage of 

lower rates by utilizing one of Rural 

Development’s refinance options.

• Interest rate is negotiated between 

the applicant and the lender. Rate 

must be a 30-year fixed rate.

• Program lending is extended to 100% 

of appraised value, not purchase 

price, so borrowers may potentially 

include closing costs and home 

repair expenses into USDA financing.

• Funds may be used for closing 

costs, reasonable and customary 

expenses associated with the 

purchase transaction, connection 

fees for utilities, tax and insurance 

escrows, essential household 

equipment, site preparation.

How do we get started?

Interested applicants can apply for 

a Section 502 Guaranteed Loan 

through any approved USDA Rural 

Development lender. We encourage 

you to contact your preferred lender 

and ask if they are an approved lender 

with USDA Rural Development.

Who can answer questions?

Applicants with questions should 

contact an approved lender. We 

encourage you to contact your 

preferred lender and ask if they 

are an approved USDA Rural 

Development Guaranteed lender.

What governs this program?

• 7 CFR part 3555 - This part sets 

forth policies for the Single Family 

Housing Guaranteed Loan Program 

(SFHGLP) administered by 

USDA Rural Development. It 

addresses the requirements of 

Section 502(h) of the Housing Act 

of 1949, as amended, and includes 

policies regarding originating, 

servicing, holding, and liquidating 

SFHGLP loans. 

• HB-1-3555 - SFH Guaranteed Loan 

Program Technical Handbook. This 

handbook provides Agency staff 

and lenders participating in the 

Single Family Housing Guaranteed 

Loan Program with the tools needed 

to originate, underwrite, and 

service guaranteed loans efficiently 

and effectively.

Why does the USDA Rural 

Development do this?

This program helps lenders work 

with low- and moderate- income 

families living in rural areas to 

make homeownership a reality. 

Providing affordable homeownership 

opportunities promotes prosperity, 

which in turn creates thriving 

communities and improves the quality 

of life in rural areas.

What if I don’t qualify?

USDA also offers a direct 502 

purchase program which provides 

for subsidized payments for those 

applicants from households with income 

below 80% of MHI and who cannot 

qualify for a guaranteed loan. Interested 

applicants should contact their state 

USDA Rural Development office.

Tools and Resources:

To determine Property and Income 

eligibility: https://eligibility.sc.egov.

usda.gov/eligibility/welcomeAction.do

NOTE: Because citations and other information may be subject to change, 

please always consult the program instructions listed in the section above, titled 

“What governs this program?” You will find additional forms, resources, and 

program information at: rd.usda.gov. Go to the “Programs and Services” tab and 

then select “Single Family Housing Programs.” USDA is an equal opportunity 

provider, employer, and lender.

August 2020