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Blog Post
The Single Family Housing Guaranteed Loan Program: A Guide
- By Admin
- •
- 10 Dec, 2019
The United States Department of Agriculture (USDA) has several programs that help people in rural areas obtain financing to purchase homes. The most prominent of these initiatives is the Single Family Housing Guaranteed Loan Program, also known as the Guaranteed Loan Program. Here is a brief guide to this important government program.
What Does It Do?
The Guaranteed Loan Program offers mortgages to those who meet certain eligibility requirements and are unable to obtain a mortgage through other channels. The USDA does not lend the money themselves, but acts as a guarantor of the loan. The loans are actually made by private financial institutions approved by the USDA.
Who Is Eligible?
The Guaranteed Loan Program has a number of requirements for eligibility. You must have an income that is less than 115 percent of the median income in your area. Borrowers must also have a reasonably good credit history, although your credit does not need to be spotless.
Typically, lenders who offer Guaranteed Loan Program mortgages prefer to work with people who have not had any debts go into collections in the last year. If you are able to explain why you have a credit problem, however, such as an unavoidable health emergency, you might still be able to obtain a loan.
You must also have enough income to ensure that you're able to repay the loan in the allotted time frame. The house that you purchase with the mortgage must be your primary residence. The program is open to United States citizens, U.S. non-citizen nationals, and qualified aliens.
Debt
Another important eligibility requirement involves the amount of debt you are carrying as a percentage of your total income. You are typically not allowed to have a monthly mortgage payment that is more than 29 percent of your monthly income. Also, your total monthly debt payments cannot exceed 41 percent of your monthly income.
Preferences
When the program has limited funds, certain individuals get a preference regarding the loans. In times of limited funding, veterans and people who are buying their first homes go to the head of the line.
What Properties Are Allowed?
Guaranteed Loan Program loans are only allowed for certain types of properties, such as existing homes that meet minimum standards outlined by the U.S Department of Housing and Urban Development.
Also, you can use one of these mortgages to buy a lot and build your own home. The new homes constructed under the program must meet standard building code requirements. New manufactured homes are eligible for a mortgage, but existing manufactured homes are excluded unless they meet certain conditions.
The money from the loan can also be used to make any necessary repairs to a purchased home or to install energy efficient features, such as solar panels.
What Is the Interest Rate?
The interest rate on Guaranteed Loan Program mortgages is subject to negotiation between you and the lender. The lender will take your credit history and your employment history into consideration when deciding what rate to offer.
The program sets an upper limit on the rate, which the lender may not exceed. The interest rate cannot be higher than the current rate offered by the Federal National Mortgage Association (Fannie Mae) for their 30-year, 90-day mortgages by more than one percent.
Only fixed rate mortgages are allowed. Adjustable rate and balloon mortgage are prohibited.
USDA Single Family Housing Guaranteed Loan mortgages are one of the many types of attractive mortgages for which you might be eligible. Let the experts at Cornerstone Residential Mortgage help you determine which mortgage offering will work best for you. Contact us at Cornerstone Residential Mortgage to learn more.
What Does It Do?
The Guaranteed Loan Program offers mortgages to those who meet certain eligibility requirements and are unable to obtain a mortgage through other channels. The USDA does not lend the money themselves, but acts as a guarantor of the loan. The loans are actually made by private financial institutions approved by the USDA.
Who Is Eligible?
The Guaranteed Loan Program has a number of requirements for eligibility. You must have an income that is less than 115 percent of the median income in your area. Borrowers must also have a reasonably good credit history, although your credit does not need to be spotless.
Typically, lenders who offer Guaranteed Loan Program mortgages prefer to work with people who have not had any debts go into collections in the last year. If you are able to explain why you have a credit problem, however, such as an unavoidable health emergency, you might still be able to obtain a loan.
You must also have enough income to ensure that you're able to repay the loan in the allotted time frame. The house that you purchase with the mortgage must be your primary residence. The program is open to United States citizens, U.S. non-citizen nationals, and qualified aliens.
Debt
Another important eligibility requirement involves the amount of debt you are carrying as a percentage of your total income. You are typically not allowed to have a monthly mortgage payment that is more than 29 percent of your monthly income. Also, your total monthly debt payments cannot exceed 41 percent of your monthly income.
Preferences
When the program has limited funds, certain individuals get a preference regarding the loans. In times of limited funding, veterans and people who are buying their first homes go to the head of the line.
What Properties Are Allowed?
Guaranteed Loan Program loans are only allowed for certain types of properties, such as existing homes that meet minimum standards outlined by the U.S Department of Housing and Urban Development.
Also, you can use one of these mortgages to buy a lot and build your own home. The new homes constructed under the program must meet standard building code requirements. New manufactured homes are eligible for a mortgage, but existing manufactured homes are excluded unless they meet certain conditions.
The money from the loan can also be used to make any necessary repairs to a purchased home or to install energy efficient features, such as solar panels.
What Is the Interest Rate?
The interest rate on Guaranteed Loan Program mortgages is subject to negotiation between you and the lender. The lender will take your credit history and your employment history into consideration when deciding what rate to offer.
The program sets an upper limit on the rate, which the lender may not exceed. The interest rate cannot be higher than the current rate offered by the Federal National Mortgage Association (Fannie Mae) for their 30-year, 90-day mortgages by more than one percent.
Only fixed rate mortgages are allowed. Adjustable rate and balloon mortgage are prohibited.
USDA Single Family Housing Guaranteed Loan mortgages are one of the many types of attractive mortgages for which you might be eligible. Let the experts at Cornerstone Residential Mortgage help you determine which mortgage offering will work best for you. Contact us at Cornerstone Residential Mortgage to learn more.
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YP REVIEWS
Alice D. On 2/18/2021
Have used Cornerstone Residential Mortgage twice now. They helped me find great financing on a modular home and land package (permanent foundation) and then again to refinance a few years later. They got me a great interest rate both times. They are professional, wonderful communication, knowledgeable, and are genuinely present and available during the entire process. It feels like doing business with friends. I can hot recommend them highly enough!
Larry T. On 11/20/2020
If you are looking to get a home loan or re-finance then you need to call cornerstone and talk to Sonya. She and her team are the most helpful and pleasant people you will ever deal with. As a first-time buyer, I was totally intimidated by the process but they not only made it easy to understand but also made the whole process pleasant from start to finish. CALL THEM!
Pete M. On 11/06/2020
Sonya and her team are absolutely incredible! If you don't call Cornerstone first, you're wasting your time. The customer service, professionalism and respect that you receive as a customer is far beyond compare. I cannot say enough good things about these ladies. They have made my buying experience from the first call to closing day a breeze! Not to mention saving me tons of money! Thank you so much to everyone at Cornerstone Mortgage! I will recommend them to everyone I know. Don't forget to ask Sonya if she knows a fantastic realtor...Here's a hint (she does)!
Michelle P. On 08/30/2019
My husband and I highly recommend Cornerstone Residential Mortgage. Sonya, Kelly and Leslie are all great to work with! Very informative, professional and great customer service. Being a first-time home buyer, I had A LOT of questions. They would answer all my questions and stayed in contact with me during the whole process. We are now homeowners!!! Thank you to all at Cornerstone that made it happen!!!
Corrie B. On 08/08/2019
Very thankful for the whole team at Cornerstone Residential, who walked us through the purchase of our first home with ease and expertise. The whole process was stress-free and everything was well communicated. They were patient as we asked many "newbie" questions and were genuinely caring in their responses. Sonya and Leslie were awesome!! Couldn't recommend more highly.
Dorothy T. On 04/18/2019
Sonya, Kelly, and Leslie were wonderful at walking my husband and I through the entire process of purchasing our first home. We felt incredibly supported by them and their knowledge of the process as they held our hands through the whole thing. We both truly felt they all had our best interest in mind when explaining things. We felt like the entire office knew us personally with each interaction. They did an excellent job at keeping up communication and informing us of every step. They truly made the whole process way easier than what we have heard our friends experience. We have already recommended Cornerstone to several of our friends and family members. We love our new house and are so happy we had such an amazing team to help us get home! Thanks Cornerstone!!
Nigel B. On 01/31/2019
They are very professional. Whenever I called them they were always there and returned my calls if they could not. Very informative through the transaction.
Very nice people to work with. Would do business again.
Luschanee On 10/03/2018
This place was absolutely wonderful. Everyone was very friendly and treated us like family!! Buying our first home was a great experience becaue of the people here at Cornerstone Lending!
Jonathan C.
On 03.26.2018
Cornerstone guided us through the entire process. They answered questions promptly and where always available.
Amy N.
On 03.22.2018
The loan process was smooth and seamless. Sonya and her team know their stuff. I would definitely recommend Cornerstone to a friend.
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