Home Plans

Rural Development (RD) financing is perhaps the most misunderstood home financing offered in the United States today. It however provides probably the best terms for home financing available. Best of all this loan features the NO MONEY DOWN option. In addition, if your adjusted income is below 80% of the county medium income for your area you may even qualify for payment assistance from RD to an interest rate equivalency of as low as 1% interest. This in combination with a loan provided by Allied Home Mortgage Capital Corporation can give you a payment hundreds of dollars less than payments offered by more commonly used home financing.

WHO AND WHAT IS RURAL DEVELOPMENT?

(Formerly known as Farmers Home Administration or FmHA)

USDA (United States Department of Agriculture) has the unique responsibility of Coordinating Federal assistance to rural areas of the Nation. The Rural Development mission is to help rural Americans improve the quality of their lives, one of which is the financing of safe, decent, affordable housing. A new and sharper focus on rural development took shape with passage of the Department of Agriculture Reorganization Act of 1994. One of the new Rural Development organizations reporting to the Under Secretary for Rural Development is the Rural Housing Service (RHS) whose responsibility includes rural housing programs.

HOW MUCH MONEY WILL I NEED FOR A DOWN PAYMENT?

A down payment is not required.

IS THIS FIXED RATE FINANCING?

YES. The 502 Leverage/Direct loan is comprised of two loans, both of which are fixed rate. The portion provided by Allied Mortgage Capital Corporation is fixed rate for 30 years. The portion provided by RD is fixed rate for 33 years. The RD portion of the 502 Leverage/Direct loan is then subsidized to an Equivalent Interest Rate (EIR) as low as 1% as determined by borrower's adjusted income. In no case will borrower's payment to RD ever exceed the interest rate set by RD which is already typically below market rate for similar type loan products.

ARE THERE LOAN LIMITS?

The 502 Leverage/Direct loan DOES have loan limits.

Contact us for loan limits for your area.

ARE THERE INCOME LIMITS?

YES. There are income limits on the 502 Leverage/Direct loans. The limit is typically 80% of the county median income adjusted to family size.

BEST ADVICE...Don't automatically assume you don't qualify. To determine adjusted income RD allows borrowers to deduct from their gross income select amounts based on the number of dependents in a household, childcare expense, un-reimbursed medical expenses of elderly borrowers exceeding 3% of gross income, and other factors to determine eligibility. BEST OF ALL,...these deductions are then ignored when payment ability is determined. You get to use your gross income to qualify for the home even though the gross amount may be above the local county income limits.

ARE YOU ELIGIBLE FOR PAYMENT ASSISTANCE?

RD 502 Leverage/Direct loans offers payment assistance to an equivalent interest rate (EIR) as low as 1% to borrowers whose “adjusted” income is typically below 80% of the median income adjusted to family size.

WHAT ABOUT CLOSING COSTS?

Even though RD is a NOTHING DOWN LOAN...there are closing costs. However, the seller can pay all or a portion of the closing costs and prepaids and any remaining closing costs can be added to the loan amount up to the appraised value of the property. If any cash is required of the buyer it can be 100% gifted. What this can mean is a low cost or “0" total move-in cost to a borrower. It is definitely possible to get into a new or existing home for no money out of pocket. BEST ADVICE...Contact your loan officer on how to structure your financing to ensure all closing costs and prepaids have been allowed for.

DO I HAVE TO BE A FIRST TIME HOME BUYER?

No. Rural Development loans are available to all that qualify. You do not have to be a first time home buyer. However, you cannot own two homes.

CAN I REFINANCE MY EXISTING LOAN WITH THIS LOAN PROGRAM?

No.

HOW MUCH HOUSE CAN I AFFORD?

BEST ADVICE... Call us for pre-qualification. Because of the unique features of these loans you may be able to qualify for more home than you may assume. We can Mail, Fax, or E-Mail a loan pre-qualification questionnaire to you. It's quick and easy.

WHAT ABOUT MY CREDIT?

While it is important that your credit be good to qualify...it by no means has to be perfect. Underwriting a loan is an art not a science. Not all borrowers are the same and each applicant's circumstances may be different. As a basic guideline, if you have declared bankruptcy, it must be discharged a minimum of three years. (There are exceptions). Outstanding collections and judgments must be paid but underwriter discretion is allowed base on individual circumstances. Underwriting's goal is to determine your willingness and ability to pay your house payment not find ways to deny your loan. BEST ADVICE: If you're not sure how your credit is...FIND OUT. A copy of your credit report is available by contacting the three national credit bureaus of Trans Union, Experian (fka TRW) and Equifax. If you still have questions or concerns about your credit you should contact an Allied Home Mortgage Capital Corp. loan officer.

WHAT IF I HAVE NO CREDIT?

If you have no credit or never used credit that's OK. The lack of credit is not necessarily a reason to deny a loan. Many factors are used to determine your willingness and ability to pay your house payment. BEST ADVICE: Don't assume you don't qualify...FIND OUT.

MY CREDIT IS GOOD BUT MY SPOUSES CREDIT IS TERRIBLE.

Can I get a loan by myself? YES. This is referred to as a Non-Purchasing Spouse Loan. If you meet credit and income guidelines by yourself you may be able to purchase a home. Your spouse's credit is disregarded.

Note however, that if the spouse's credit is disregarded his or her income will not be counted in determining repayment ability. You must qualify by yourself.

WHEN SHOULD I START MY LOAN?

AS SOON AS POSSIBLE. You don't have to have a property contracted in order to start the loan process. Let us get you pre-approved it can help in your contract negotiations.

WILL I KNOW RIGHT AWAY IF I QUALIFY FOR A LOAN?

We can pre-qualify you with unverified information by phone or in person. However, final eligibility and approval will not be made until formal application is made, all provided information is verified, and credit is determined to be acceptable.