A rural development loan is a great option for families looking to purchase a home in Rhode Island. However, there are several items and regulations to consider when choosing this type of loan.
There are currently two types of RI rural development loans to consider. The first is a USDA Guaranteed Rural Development Loan. This is the most popular option available. It allows for higher income limits as well as 100% financing. The terms for this loan are for 30 years and the rate is fixed.
The second option is called a USDA Direct Housing Loan and is less common. This loan is only available for households with low and very low incomes. To qualify for this loan, household income must be 50% lower than the area median income.
To qualify for these loans, monthly housing costs must be less than 29% of one’s gross monthly income. When considering additional debt, the ratio must fall under 41% with the house payment included compared to the monthly income. A FICO credit score of 620 or greater is also required. Along with this, families must be without adequate housing, but should also be able to pay for mortgage payments, taxes and insurance.
While there is no maximum amount that can be borrowed, the household’s debt-to-income ratio will play a huge role in the amount of financing that is allowed. Families who are looking to purchase a home should definitely consider this type of loan for their financing needs. In order to learn more about this option and to determine if it is the right choice for your family, be sure to contact us today.