A USDA Guaranteed Loan is Government insured 100% purchase loan. These Loans are only offered in rural areas and serviced by direct lenders that meet federal guidelines.
Under the Guaranteed Loan program (Section 502), the Housing and Community Facilities Programs guarantees loans made by private sector lenders. The individual works with the private lender and makes his or her payments to that lender. Section 502 loans are primarily used to help low-income individuals or households purchase homes in rural areas. Funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities.
Under the terms of the program, an individual or family may borrow up to 100% of the appraised value of the home, which eliminates the need for a down payment. Since a common barrier to owning a home for many low-income people is the lack of funds to make a down payment, the availability of the loan guarantees from HCFP makes the reality of owning a home available to a much larger percentage of Americans.
In the said loan you don't need down payment and there is no maximum limit. It's a great level of savings because low credit is good enough for obtaining this loan and with easy and flexible repayment options. Also, this program does not require mortgage insurance. The rates are also very attractive.
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