USDA Rural Development Loan – Important changes as of October 1, 2011

Mortgage and Lending with HomeTown Lenders

One of the best kept secrets in the mortgage industry is the USDA Rural Development Loan or RD loan as it is sometimes known. There are several reason why this may be just the right loan for you.

·         Zero Down Payment

·         Seller may pay some or all of the closing costs

·         Competitive, 30 year, fixed rate Government mortgage

Up until October 1, 2011 we could have added “no monthly Mortgage Insurance”

Currently the USDA Rural Development Loan requires a small MI payment that is calculated on the average annual scheduled unpaid principal balance for the life of the loan. The fee will be calculated when the loan is made and every 12 months thereafter until the loan is paid in full.


The good news is that the previous Funding Fee of 3.5% is now lowered to 2%. This fee is paid at the time of closing and may be financed in the loan therefore no cash is required from the borrower.


To see how the new MI will affect your monthly payment, you can click on the following link for a chart that calculates the payment


Annual Fee Calculation


So, what do you think? Is the USDA Rural Development Loan still a good deal? I think so. If you’re wondering what it takes to qualify? Call me at (615) 895-4265 or email .


Comments (2)

Edina Realty, Inc. - Gordon, WI
Your Northwest Wisconsin Realtor

Thanks Hal. This is good information to know for those buyers that may need this type of financial assistance.

Nov 11, 2011 01:43 AM
Hal Tennant
HomeTown Lenders - Murfreesboro, TN
Get a Zero Down Mortgage - How to buy a home with no money down

Hi Jean,

The USDA Rural Development Loan is one of my favorites. Looks like you are in a great area to utilize this product. Except for Eau Claire proper, most of the surrounding area is eligible. 

Nov 11, 2011 04:20 AM