Dateline: May 5, 2005

USDA loans available for prospective home buyers

TEMPLE – Bryan Daniel, USDA Rural Development State Director, announced this week that more than $85 million is available to assist rural Texans become homeowners through the Agency’s Guaranteed Rural Housing loan program.

“With mortgage interest rates continuing near their lowest levels in recent history, now is the time to stop paying rent and purchase your own home,” said Daniel. “Our Guaranteed Rural Housing loan program is the best option for eligible low and moderate-income applicants to move into a home without a down payment.”

In many cases most of the closing costs associated with purchasing the house can be financed into the loan. Loans can be made to purchase new or existing homes that meet Agency requirements. In addition to allowing a Maximum Loan to Value ratio of 102%, another very attractive feature of this loan program is that the borrower is not required to pay mortgage insurance.

Other zero down programs charge an up front mortgage insurance premium that is due at closing, with monthly mortgage thereafter. In comparison, the Guaranteed Rural Housing Program offers a significant savings to borrowers by charging a one-time only, two percent (2%) guarantee fee that is due at closing, and no monthly mortgage insurance. Typical savings for a family can range between $20.00 and $50.00 per month. A loan comparison calculator is available on our website at www.rurdev.usda.gov/tx/loancomp.htm.

Without expensive mortgage insurance premiums, homebuyers can qualify for a “better” home, which could mean the additional bathroom or bedroom that they may desire. Also, homebuyers may include their two percent fee in the loan. This will have a minimal impact on their payments yet maximize any cash reserves they may have. They can put down $2,000 toward a home loan or keep their $2,000 and pay roughly $12 more per month.

USDA Rural Development housing programs target communities with populations of 10,000 or less and locations not closely associated with urban areas.

Private lenders make USDA Rural Development Guaranteed Loans. The loans have a 30-year term and a competitive fixed interest rate. Unlike other zero down loan programs, the Guaranteed Rural Housing Program does not have loan limits. The maximum loan is determined by the applicant’s income and repayment ability.

To find the USDA office that serves your area or to obtain a list of participating lenders, please call USDA Rural Development Housing Programs at (254) 742-9770, or visit our website at: http://www.rurdev.usda.gov/tx/