The RD home loan program is one of the best kept secrets.
This zero-down, 100% financing home loan backed by United States Department of Agriculture has been created to promote homeownership in more rural areas.
It’s often known as the Rural Housing Loan (RD Loan or USDA). The program is part of the larger Rural Housing Service under USDA's umbrella of programs.
But don’t let the name fool you. It’s not just for properties that are far removed from civilization. Areas outside of Bozeman city limits like; Four Corners, west of Gooch Hill (W of Ressler Auto), and Belgrade, Montana also qualify. Approximately97% of U.S. land mass is eligible for RD financing.
How do USDA loans work?
Getting a USDA loan program is not much different than getting an FHA loan or a conventional mortgage.
A government agency sponsors the RD program, local lenders handle 100% of the transaction. Your lender does everything from taking your application to issuing the final loan approval. RD puts a final stamp of approval on the loan, and even that is handled by the lender. Here’s how the RD home loan process looks:
Apply → Get Pre-approved → Find a House → Full Lender Approval → Final Sign off by USDA → Close the Loan → Move in
Get pre-approved: Your lender will look at your income, credit, and employment information. If you meet USDA home loan requirements, you will receive a pre-approval letter.
Find a house: Use your pre-approval letter to make an offer on a RD-eligible home. Make sure the house is in a designated RD area before making an offer.
Full lender approval: The lender adds property information to your loan file, and does one last check.
Final Sign off by RD: The lender submits your full loan file to USDA for its seal of approval.
Close the loan: You sign final paperwork. A few days later, the house is yours.
Move in: You completed your mortgage process. Enjoy your home.
No down payment is required, making it one of the few 100% financing home loans available in today’s market.USDA home loan down payment
The only other widely available zero-down loan is the VA mortgage, eligibility for which is gained by adequate military service.
USDA loans are likely the only no-down mortgage option.
Following are minimum down payment requirements for all major loan types.
Conventional loans: 3% down
FHA: 3.5% down
VA: 0% down
USDA: 0% down
With RD, home buyers can purchase immediately and take advantage of increasing home values.