The USDA Guaranteed Loan Program FAQ provides valuable guidance for homebuyers, lenders, and real estate professionals navigating USDA’s Single-Family Housing Guaranteed Loan Program. This program offers affordable home financing options for eligible rural and suburban buyers, but understanding the rules and requirements is essential for a smooth closing.

What is the USDA Guaranteed Loan Program?

The USDA Guaranteed Loan Program helps approved lenders offer low-interest, no down payment loans to qualified borrowers in eligible rural areas. The program supports homeownership for moderate-income households by guaranteeing the loan, reducing lender risk, and making financing more accessible.

USDA Guaranteed Loan Program FAQ Highlights

1. Property Eligibility

• No maximum acreage limit, but land cannot be used primarily for income-producing purposes.
• Modular homes are eligible; existing manufactured homes have restrictions.
• Swimming pools and accessory dwelling units are permitted if they meet guidelines.
• Properties must meet HUD Handbook 4000.1 minimum property standards.

2. Appraisal Requirements

• Appraisers must be state-licensed or certified.
• Appraisals are valid for 150 days; a 90-day extension is available.
• “As is” or “as improved” appraisals are acceptable.
• Repairs identified in the appraisal must be addressed before closing or via escrow.

3. Credit & Income Guidelines

• Permanent resident aliens are eligible.
• No non-occupant co-borrowers or co-signers allowed.
• Income limits apply to all guaranteed loans.
• At least one applicant must have a validated credit score; alternative credit allowed for manual underwriting.

4. Closing & Loan Terms

• E-signatures are accepted.
• Seller contributions are capped at 6% of the sales price.
• Closing costs can be financed if they are reasonable and customary.
• Occupancy must occur within 60 days of closing.
• 30-year fixed-rate terms only; adjustable-rate mortgages are not allowed.

5. Refinance Options

• Only existing USDA loans are eligible for refinancing.
• Streamlined-Assist refinances do not require a property appraisal or debt ratio calculations.
• No cash-out refinances are permitted.

Why This Matters for Homebuyers

By understanding these USDA Guaranteed Loan Program FAQ answers, borrowers can better prepare for the application process, avoid last-minute surprises, and work more effectively with their lender. Whether you’re buying your first home or refinancing an existing USDA loan, knowing the rules can help you secure financing faster.