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If you are a low-income home buyer in Fenton, Holly, or Linden, you could qualify for a very good program called a Rural Development loan.  This program, managed by the USDA, helps to provide a path to home ownership for families with low or very low income living in rural areas.  For many of these families in Fenton, Holly, or Linden, there is no other viable path to home ownership, making these rural development loans a very valuable program for many families in these areas.  Rural development loans create prosperity and thriving communities in otherwise poor areas, improving the quality of life for everyone.

There are several types of home loans associated with this program, and all of them serve a different purpose in helping lower income families buy real estate near Fenton, MI.

What is a Rural Development Loan, and How Can It Help You in Fenton, Michigan Real Estate?

A Rural Development Loan, also known as a USDA home loan, is a zero-down mortgage loan for lower income home buyers seeking housing in rural areas.  These loans are issued through a loan program operated by the USDA, or US Department of Agriculture, but you do not need to be a farmer, or even have a green thumb, to qualify. 

These loans are a part of the USDA’s Rural Development program which invested nearly $20 billion in 2014, aimed at assisting lower income families to buy or improve their homes.  The Rural Development loan program is intended to “improve the economy and quality of life in rural America,” according to the USDA, and it enables those who would otherwise be unable to obtain a real estate loan due to income requirements to buy a home with low interest rate, with no down payment at all.  If you’ve been turned down for a loan before and think home ownership is out of reach for you, consider a USDA Rural Development loan.

Rural Development Loan Programs

There are three kinds of Rural Development loan programs:  Rural Development Guaranteed Loans, Rural Development Direct Loans, and Rural Development Repair Loans and Grants.  Let us spend a little time examining these three loan programs and how they could help you in your situation.

  1.       Single Family Housing Guaranteed Loans in Fenton, Michigan

This loan program guarantees a mortgage which is issued by a local lender.  It is similar to other loan programs like FHA loans and VA-backed mortgages.  This allows you to get mortgage interest rates low enough to be feasible, even without having a down payment.  You will still have to obtain private mortgage insurance, but for those who have low or moderate income, but do not have any down payment or the time or means to save for one, this loan program can help you get 100% financing on a new home in rural or suburban areas like Fenton, Holly, or Linden, MI.

  1.       Single Family Housing Direct Loans in Fenton, Michigan

These loans are issued directly by the USDA and are intended for low and very low income home buyers looking for real estate near Fenton, MI.  These loans offer payment assistance to increase the eligibility of those who would otherwise be unable to qualify for any kind of real estate loan at all. 

  1.       Single Family Housing Repair Loans & Grants.

These are loans, which need to be repaid, or grants, which are outright awards which you don’t need to pay back, and they are meant to enable those who already own a home in areas like Fenton, Holly, or Linden to improve, repair, or modernize homes, or to help elderly or disabled homeowners to make updates to their home to add accessibility and remove health and safety hazards.  These loans and grants, like the other rural development loan programs, are meant for lower income individuals, and can provide up to $27,500 in repair or improvement assistance.

How to Qualify for a Rural Development Loan in Fenton

The major qualifying factors in any rural development loan are the income of the home buyer, the location of the home you are buying, and your household size.  The guaranteed loans are only available for “owner-occupied” residences, so this makes it sometimes difficult to use for condominiums if many of them are used as rental properties.  Your monthly payment must end up being 29% of below of your regular monthly income, and your other monthly payments on debts can’t exceed 41% of your monthly income.  This is called your “debt-to-income” ratio, so it is worth thinking about but if your credit score is in the high 600s (above 660 or so), the USDA can consider higher debt-do-income ratios.

Another factor, of course, is income, which should be a dependable income source for at least 2 years.  Your credit history doesn’t need to be stellar, but it should be fair, with no accounts in collections in the last year.  If you have documentation that your credit was negatively affected by circumstances beyond your control such as a medical emergency, you could still qualify.  A credit score above 620 should have a fairly straightforward experience, while those below 580 will have to meet a little more strict standards, but can still qualify.

How Rural Development Loans Work

This may sound like it’s too good to be true, but believe it – these rural development loans in Fenton, MI are here to help put lower income home buyers on a path to ownership where otherwise they would find resistance from banks and lenders.  The USDA has developed these loan programs to help improve the communities of rural America, and to improve the quality of life for lower income Americans who have the greatest need.  What does it mean to have the “greatest need?”  In short, the programs prefer buyers who do not currently have “decent, safe, and sanitary housing,” as the USDA website describes it, and buyers who cannot secure a real estate loan from traditional lenders.  These are buyers who have an adjusted income at or below the low-income level for the area in which they live.  If you think you meet one or more of these criteria, you should look into getting qualified for a rural development loan today.

USDA Rural Development loans are typically issued for homes with a market value below the loan limit of the surrounding area, with 1,800 square feet of area or less.  The loan amounts vary from location to location, from $100,000 in rural Michigan up to several hundred thousand dollars in more valuable real estate markets.  Of course, as the name implies, Rural Development loans typically exclude metropolitan areas, but suburban homes can qualify.  Much of the real estate near Fenton, Holly, and Linden will be eligible for Rural Development loans.

How to Apply for a Rural Development Loan

In order to apply for a Rural Development guaranteed loan, simply reach out to a participating lender.  If you are seeking a Single Family Housing Direct Loan or Repair Loan/Grant, you may contact the Michigan USDA office directly.  If you’re interested in seeing some of the Fenton, MI real estate that you could qualify for under these loans reach out to our team of expert real estate agents at Jennifer Lasco Real Estate, serving the Fenton, MI area, where we work with home buyers of all income levels and qualifications.

Posted by Jennifer L on

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