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Rhode Islanders still have the opportunity to get 100% financing through the USDA program, also known as the “rural homes program”.  The United States Department of Agriculture (USDA) offers two different types of programs; one called the Guaranteed Rural Housing (GHR) mortgage and the other Direct rural home mortgage. 

The Direct program is offered directly through USDA to low- to-very low income families.  The Guaranteed program is offered through specific lenders approved by HUD.

In order to be eligible for a USDA guaranteed loan, the Borrowers’ adjustable household income cannot exceed the maximum allowable income limit set forth in Rural Development Instruction 1980-D & 1980.348.  (115% of median income).  Income requirements can be found at: http://eligibility.sc.egov.usda.gov.

To be eligible, borrower’s must:

• Be a U.S. Citizen, qualified alien, or be legally admitted to the United States for permanent residence;
• Have an adjusted annual household income that does not exceed the moderate income limit established for the area.  A family’s income includes the total gross income of the applicant, co-applicant and any other adults in the household. (except foster adults and children)
• Have a credit history that indicates a reasonable willingness to meet obligations as they become due with a required minimum fico score of 620, set by the lender.
• Qualifying ratios of 29/41. 

Benefits of the USDA Guaranteed Rural Housing Program:

• Provides 100% loan-to-value financing for existing homes or new construction based on appraised value.
• Available to low and moderate-income rural households.
• No requirement to be a “first-time” home buyer.
• Less up-front cash-to-close requirements for this program than for conventionally insured or FHA loans.
• No monthly mortgage insurance required. However a one-time guarantee fee, payable to Rural Development (RD) at closing, which may be financed above the appraised value, as follows:
  • Purchases – 2.00% of loan amount
  • Refinances – .50% of loan amount

• Fully amortized 30-year fixed-rate loans.
• No penalty for pre-payment.
• 2/1 Temporary Buy down available.
• No maximum loan limit. Loan limits are dictated by the applicant’s income with respect to program eligibility and loan repayment ability. Previous ties to FHA loan limits have been eliminated.

To determine if a property is eligible for the GRH program, please visit: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
Program is limited to single family homes only.  No multi-family properties allowed.

Eligible counties include: Kent, Providence and Washington.  Bristol county is completely ineligible. 

In Kent county, COVENTRY is the only eligible area.

 In the Providence county, CRANSTON, JOHNSTON, LINCOLN, CUMBERLAND and SMITHFIELD are eligible. 

In the Washington county, NORTH KINGSTOWN and WESTERLY are the only eligible areas.

For more information, please call me today or apply online at http://www.guaranteedrate.com/lyndamckenzie

Lynda Mckenzie
RI license#137627/NMLS#137627
Direct:  401-524-9796
E-mail: lmckenzie@guaranteedrate.com
Web:  http://www.guaranteedrate.com/lyndamckenzie
RI Licensed- 20102682LL