FAQs about the USDA Rural Development Program

The USDA Rural Development (RD) Program is one of our most asked-about loan programs. With eligible towns in all 99 counties in Iowa, it’s not hard to see why! 

What is an RD Loan?

USDA Rural Development loans are available to buyers looking to purchase a home in a community with a population of 20,000 or less. This encompasses North Liberty, Tiffin, Swisher, Newton, Washington, Williamsburg, Solon, Grinnell and many, many more.

The USDA 2020 income limits vary by county. If you live in Johnson county, the income limit is $112,850; for Linn county residents, it is $102,700. Don’t let the RD income limits scare you! There are some eligible monthly expenses that can be deducted. Let us calculate your income! 

Who qualifies for a Rural Development Loan?

To be eligible for the Rural Development loan program, you must also:

  • Occupy the home you’re purchasing as your primary residence
  • Be a U.S. citizen or permanent resident

Realtors and buyers alike don’t know when to use the USDA Rural Development program – other lenders who offer the program don’t always even know (or want) to tell buyers when to use it – but lenders like RMN do know when to use it! And most importantly, we aren’t scared of the program. We know how to get them done just like a conventional loan – we have literally done thousands of them.

Why should I choose the Rural Development loan?

There are a number of benefits for the USDA Rural Development program, which is why we are always more than happy to offer it. 

Here the 3 main benefits of a Rural Development loan:

  • Typically a lower interest rate compared to Conventional loans
  • 30-year fixed rate financing
  • No minimum down payment required! Still a great option with some down payment. 

In fact, you can get 100% financing through the Rural Development program and still pay a lower interest rate than Conventional. There is a Guarantee Fee included with 100% financing, which is similar to private mortgage insurance (PMI). However, with the lower, fixed interest rate of the RD loan, you’ll still come out ahead!

What is the Guaranty Fee?

Some lenders that don’t understand the program try to scare buyers by telling them the PMI is expensive, when in reality, it’s not! The Guaranty Fee is a 1% fee added (financed) into the loan plus a small monthly fee that reduces as you pay down your loan balance. When compared to a Conventional loan at a higher rate (and often a higher PMI) it is much more competitive and inexpensive. 

Buying a Home with a Rural Development Loan

If you or anyone you know is looking to buy a home in an eligible area, then an Iowa Rural Development loan may be the right loan program for you!  Please feel free to contact us or give us a call to discover your eligibility.