This website covers the mortgage guidelines for the
Rural Development Direct Mortgage. This home loan is sometimes referred to
as the 502 Direct Loan. Yes, it is a 100% LTV
mortgage. No down payment. This direct home loan is focused toward low and very-low income
families. No down payment is required and all of your closing costs may be
paid by the seller.
At the end of each fiscal year (Sept.
30th) there is no funding for
this program. Funding comes from Congress. We all understand the
U.S. budget issues at hand. USDA has no idea if or when funds will be
allocated but they usually have them by January of the next year.
Remember, Rural Development must process loan requests in the order they
come in so don't let lack of funding stop you from applying for this loan.
is a short video that will give you the basics but you should still explore this
site to get more information.
It is important that you know what the
qualifying guidelines are before you decide if the USDA Housing Loan is what you want to apply
for. We will review all areas regarding buyer eligibility, property
eligibility, underwriting guidelines, and the application process.
After you review the
guidelines on this site for a USDA loan, it might be helpful for you to review
the guidelines for a conventional mortgage. The mortgage
underwriting guidelines are totally different.
502 Direct Mortgage
Buyer eligibility is concerned
Property eligibility focuses on:
Price or loan limits
What is not eligible
The application process is quite different than if you were to apply at your
bank or a mortgage lender in your area. Remember, these funds are coming
straight from the Government so this mortgage is heavily regulated and
monitored. This adds many steps that outside lenders do not have to
You do not want to shop for your home until you have been
determined eligible by the agency underwriters. This usually takes about a
month or more. When you have been determined eligible you will be given a
Certificate of Eligibility that specifies how much you may qualify for.
After you receive the COE you begin shopping for a home. You can review
the complete process in detail from the menu on the left.
The Direct mortgage is a great loan so if you have a lot of time on your hands you should
apply if you meet the income and credit guidelines.
Other USDA Rural Development Single Family Housing Programs:
The USDA Rural Housing Guaranteed loan is also a 100%
LTV mortgage. No down payment is required and the seller can pay closing
cost. There is a 2% funding fee charged for this loan but it can be
financed into the loan. That would make it a maximum 102% LTV
mortgage. This loan is acquired through outside lenders, banks, or
The guaranteed loan is focused at moderate income
families but if you are low income you may still qualify if you have good credit
and a low DTI. As with all Rural Development programs the house must be in
an eligible rural area. You can learn about the underwriting guidelines at
the following site: Rural
Development Guaranteed Mortgage Underwriting Guidelines
502 Direct Mortgage
502 Direct mortgage is what this website is all about. Use the menu on the
left for details on the mortgage underwriting guidelines. This is a great
program but you do have to qualify. Take your time to brows the mortgage
guidelines and buyer eligibility guidelines.
Subsequent 502 Direct Repair loans
Subsequent 502 loans
are made to people who already have a 502 direct mortgage and need repairs on
their home but do not qualify for the 504 repair loan because their income is
too high. It's very complicated because there is no such thing as a
502 repair loan. However, it does happen to protect the
government's interest in the property. The only way to get this loan is if
you cannot qualify for any other loan to fix your home. Your current 502
mortgage must be in good standing. This loan is not covered here in detail
because qualification is determined on a case by case basis. If you want more
information you should contact the USDA office that provided you with your
Direct Repair Loan
This is a home repair loan. It's purpose is to
provide people with VERY LOW income a source of funds to keep their home
repaired and in a livable condition. It focuses on health and
safety. And again, ... the home must be located in an eligible rural area.
We have included a page that covers the details of this loan. See the menu
on the left.
Everyone wants a Government Grant. This
happens to be a wonderful program directed at the elderly in our communities. It
is also the only grant program available in USDA Rural Development Single Family
Housing Programs. People eligible for this grant must be 62 years of age or
older. The maximum amount is $7500 in anyone's life time. The funds
must be used for home repairs that involve health and safety. The use of
these funds are controlled and supervised by the agency. There is a link
in the menu for more details.
Take your time to review the site. If you have specific questions we
suggest you contact your closest USDA RD office because all offices operate
differently and because loan limits/income limits change from county to
county. If you have a general question you can send us an email.