Rural Development loans are backed by the USDA and have some similar lending guidelines to FHA. However, RD loans cover only properties deemed “rural” by the USDA.
Just so, can you have a USDA and FHA loan at the same time?
While you might not qualify for a more conventional mortgage, you’ll be happy to know you may qualify for a couple of popular government-backed loan options – the FHA Home loan and the USDA Rural Development loan.
Correspondingly, how long does it take to get approved for a Rural Development Loan?
How much can you borrow with a USDA loan?
USDA loans allow financing up to 100% of the appraised value of the property, plus the guarantee fee. So, if you’re buying a home with a USDA loan and the home appraises at $250,000, you can get a loan for that amount plus your $2,500 guarantee fee (1% of the loan amount).
Qualification is easier than for many other loan types, since the loan doesn’t require a down payment or a high credit score. Homebuyers should make sure they are looking at homes within USDA-eligible geographic areas, because the property location is the most important factor for this loan type.
Here are key benefits of USDA rural development loans:
- A Down Payment Isn’t Required.
- Borrower Qualifications Are More Lenient.
- Less Money Spent On Mortgage Insurance.
- Lower Interest Rates.
- *Remember that only certain property types are USDA-eligible.
1. Income and debt issues. Things like unverifiable income, undisclosed debt, or even just having too much household income for your area can cause a loan to be denied. Talk with a USDA loan specialist to get a clear sense of your income and debt situation and what might be possible.
The Rural Development loan is a 100% financed home loan, insured by the United States Department of Agriculture to promote homeownership in less-dense communities. … It’s one of the few loans, other than the VA loan, that doesn’t require you to have cash upfront for the down payment.
Cons to the USDA Rural Development Loan
Geographic restrictions. Mortgage insurance included (may be financed into loan) Income limits. Single family, owner occupied only – no duplex homes.
USDA loans offer 100 percent financing, meaning there is no down payment required. FHA loans, on the other hand, require at least 3.5 percent down. Though this is less than conventional loans often require, it does mean the buyer must put down a lump sum of cash up front.
The biggest difference is that with RD loans, just like FHA loans, you must carry that mortgage insurance for the life of the loan. Or you can refinance. There is no prepayment penalty with either FHA or RD. There are also geographic and income limits.
FHA Loan Limits 2021
FHA loan limits for 2021 range from $356,362– $822,375 and vary by county. The maximum amount for an FHA loan on a single-family home in a low-cost county is $356,362, while the upper limit in high-cost counties is $822,375.
USDA eligibility for a 1-4 member household requires annual household income to not exceed $91,900 in most areas of the country, and annual household income for a 5-8 member household to not exceed $121,300 for most areas.