- Are only houses in the country eligible for the Rural Home Loan?No, actually the Rural Home Loan is valid on 97% of the country. “Rural” normally implies areas removed from major cities, but Rural Home Loan-eligible areas often include suburban communities outside major cities. A licensed real estate agent or a mortgage loan officer can verify the eligibility of a particular home.
- Will only families considered low-income qualify?
Not necessarily. Although the Rural Home Loan was created to help lower income families afford homes, the income limits often include average wages. The income guidelines are set based on the average per capita income in a given geographical area, considering the number of household members. Many people are surprised to find they are within the limits.
- Do you have to be a first-time homebuyer to get this loan?No, even though the Rural Home Loan gives first-time homebuyers a break from the typical costs associated with buying a home, people who have previously owned homes can take advantage, as well. If you sell a home and wish to purchase another in a rural area, instead of using equity from the sale as a down payment, you can save it for home renovation or other moving costs.
- Does the Rural Home Loan require any money down?
No, this loan requires $0 down. Where comparable loan programs like FHA ask for at least 3.5% down, the Rural Home Loan is 100% financed. It even has the option to finance closing costs and other fees into the loan. This means instead of owning a large sum of cash at the closing table, you can make small monthly payments each month toward the balance.
- Does your credit need to be excellent to be approved for the Rural Home Loan?
Unlike other loan programs that require credit scores above 640, the Rural Home Loan will accept credit scores as low as 620. This means if you have had prior foreclosures, bankruptcies, judgements, and collections you may still qualify for this loan. You must have at least two active, current lines of credit on your report with no debt turned over to collections within the previous 12 months. You must also have no outstanding federal debt or unsatisfied judgements.
- Does this loan take longer to close?
Despite the Rural Home Loan having more lenient guidelines, it doesn’t take any longer to close than other loan programs. The guidelines are government-mandated so determining a loan’s approval is easy for Underwriters. In typical cases, a loan will close within 30 days if all necessary documentation is provided when needed and no qualifying factors like income and debt change.