• The Rural Development Loan Program

  • What is the USDA or Rural Development (RD) Loan?


    This is a government backed mortgage that allows you to put ZERO down on a new home.  The seller can even pay for up to 6% of the purchase price for your closing costs and gifts are allowed.

    I know this almost sounds too good to be true, so what is the catch?  There are a few restrictions that you need to be aware of upfront:

    Income limitations:  To be eligible for the program, households must have incomes at or below 115 percent of the median area income.  There are no maximum loan amounts for the program, but applicants must meet the program’s loan repayment underwriting ratios while remaining within the income limits.  Please click on the link below to see the income limits for your county:

    USDA County Income Limits

    What areas are considered Rural?  For Southeast Michigan, it is areas that include South Lyon and west.  Please click on the link below to see if the property you are looking at is eligible:

    Rural Development Eligible Areas

    How does the Guarantee Fee (PMI) work?  The guarantee fee/PMI will be 2% of the total loan amount plus a .4% annual fee.  The annual fee is broken down into a monthly payment amount.  This does NOT ever go away- it is applied for the life of the loan.  This is different than the FHA or conventional loan where the mortgage insurance drops off automatically at 80-78% loan to values.

    We have had a lot of success with the program and many happy new homeowners!  Please let us know if you have any questions.

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    • Julie

      I’m interested in a rural development loan. How do I get a application?