USDA Rural Development (RD) Loans
The Rural Development loan through USDA is designed to help grow home ownership in communities with a population of 20,000 or less. There are towns in all of the 99 counties in Iowa that are eligible. Some of them include North Liberty, Solon, Tiffin, Williamsburg, Swisher and Newton. There are many more eligible towns than ineligible ones! Don’t hesitate to email or text us the address of the property you are curious about and we will confirm eligibility for you.
What makes the RD Loan so great
- Zero down payment required
- 30 year fixed rate
- Interest rate lower than Conventional
- Many communities in Iowa are eligible
- Fixed rate Condo financing
Requirements of the program
- Income limits – the USDA 2021 income limits vary by county. If you live in Johnson County, the income limit is $114,850; for Linn County residents, it is $102,800. Don’t let the RD income limits scare you! There are some eligible monthly expenses that can be deducted. Let us calculate your income!
- Must occupy as your primary residence
- US Citizen or permanent resident
How is the process different for a USDA loan at Residential Mortgage Network vs. a local bank?
When it comes to RD loans, where you get your loan from DOES matter. Other lenders may discourage the program claiming that financing will take longer when that is simply not true. At RMN, we underwrite all of our loans in-house.
We are a mortgage bank, not a broker, meaning we are in complete control of the process from start to finish. We can simply walk down the hall to talk to our processors and our underwriters, so things get done immediately. There isn’t a better way to explain it – it is just that easy! Many other mortgage companies in Iowa can’t say the same.
Because of this, we are able to meet quick financing deadlines so your closing does NOT take longer with an RD loan. 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.
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.
In addition to that, the 30-year fixed rate is typically lower than a regular conventional loan. It is certainly more stable than an adjustable-rate mortgage (ARM) that is often pushed by banks that don’t know how to efficiently process and close USDA loans.
Home Condition Requirements
Some lenders discourage the use of the Rural Development loan because they say the home must be in “perfect condition.” That’s not true! There are a few requirements, but they are (in most cases) an easy fix or something that can be addressed up front. Some of these requirements include: chipped/peeling paint, bad roof or handrails on stairways.
The home condition requirements for a Rural Development loan are not “stricter” than any other program. Ultimately, the home you are buying should not have these issues by the time of your closing no matter what loan program you choose!
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