Rural Development

Rural Development (RD) is an agency of the U.S. Department of Agriculture that guarantees 0% down payment conventional type mortgages. Because of the guarantee, lenders require no down payment with this program. Additionally, if the appraised home value exceeds the sales price some or all of the closing costs can be financed in the loan amount. The borrower must pay a Guarantee Fee to RD in lieu of monthly mortgage insurance. Underwriting on RD loans tends to be fairly stringent regarding income and debt ratios but is fairly accommodative of other qualifying criteria. It is a good program for borrowers that have minimal cash assets with which to close.

While RD loans are very similar to conventional loans, some important distinctions are worth noting:

• Income ceilings based on family size and residence county apply, a borrower is ineligible if these limits are exceeded.
• Debt to income ratio underwriting is very strict.
• An RD appraisal must contain commentary from the appraiser on the home’s thermal efficiency.
• Eligible areas/properties

The Guaranteed Rural Housing loan program may be used to finance properties located in rural areas. Rural is defined as any town of 25,000 or less that is not adjacent to a large city or that is not part of a continuous urban area.

Since California is a large state with many small towns, a listing of all eligible rural towns would take several pages. Therefore, the listing below is intended to give an overview of eligible rural areas in each county. This listing is of towns where the rural population is the largest and most concentrated and where there is the most activity of USDA GRH loans.

Also, please note that there are 20 counties in California that are completely eligible for the GRH loan program.

The list below is only a partial listing of the many small communities eligible to participate in the Guaranteed Rural Housing loan program. Maps of eligible and ineligible areas are available at the following website: http://eligibility.sc.egov.usda.gov

The following California counties are completely eligible to participate in the USDA Rural Development Guaranteed Rural Housing loan program:

The following county is completely ineligible to participate in the USDA Rural Development GRH loan program: San Francisco

The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, age, disability, and where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or a part of an individual’s income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (braille, large print, audiotape, etc.) should contact USDA’s TARGET Center at (202) 720-2600 (voice and TDD).

To file a complaint of discrimination write to USDA, Director, Office of Civil Rights, 1400 Independence Avenue, S.W., Washington, D.C. 20250-9410 or call (800) 795-3272 (voice) or (202) 720-6382 (TDD). USDA is an equal opportunity provider, employer, and lender.