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Tuesday, May 16, 2006

Mortgage Guarantees for Rural Properties

The United States Department of Agriculture (USDA) through their Rural Housing Service division offers mortgage guarantees to lenders for borrowers who have qualified rural properties. Through this program USDA will provide a guarantee that they will reimburse the lender for a high percentage of the borrower's loan amount should the borrower default on the loan. This makes it much easier for borrowers to obtain a loan on rural property, which lenders would otherwise consider more risky.

To qualify for this program a property must be verified as being in a recognized rural area. There are also restrictions on the LTV and DTI limits, loan amounts and payment shock. These limits are generally similar to conforming loans.

If you are having trouble qualifying for a loan on a rural property ask your lender to contact USDA for a guarantee approval. USDA offers an automated qualification system that can process an application in seconds.

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