Massachusetts USDA Mortgages

Massachusetts Mortgages

Massachusetts Mortgage Rates

Massachusetts Mortgage Rate Alerts

Massachusetts Mortgage Loans

Calculators

Expert Mortgage Advice

Massachusetts Mortgage Resources

Company Info

Employment Opportunities

Other Services

AddURL

Newsletters

Success Guide For Real Estate Pros

Realtor Success Guide

Company Home

Go to Company Home

Massachusetts USDA Mortgages

Download Massachusetts USDA Brochure. Click here

Families and individuals living in rural areas may be eligible to become homeowners with the help of a little known program: the U.S. Department of Agriculture (USDA) Rural Development Guaranteed Home Loan.

The Massachusetts USDA offers a variety of programs to help low to moderate-income individuals living in small towns or rural areas achieve homeownership. And you might be surprised at what’s considered Rural!

The Rural Housing Service (RHS) helps qualifying applicants who typically cannot obtain credit from other sources to purchase modestly priced homes as their primary residence. Through the USDA Home Loan program available in Massachusetts, low and moderate income borrowers can qualify for mortgages – even without a down-payment.

USDA Rural Development Home Loans are an attractive option in Massachusetts because:

No down payment – you can finance up to 100% of the purchase price
There are minimal closing costs
There are no monthly mortgage insurance premiums
They can be used to purchase a new or an existing home
They can be used toward the purchase and renovation of a previously owned home

To be eligible, you must:

Have an adequate and dependable income. You must be able to fully document your income and assets.
Be a U.S. citizen or be legally admitted to the United States as a permanent residence.
Have an adjusted annual household income that does not exceed the published limits for the county in which you purchase. Income includes the total gross income of the applicant, co-applicant, and any other adult in the household. It excludes certain expenses and adjustments. A large family will qualify for more home than a single person.
Have a credit history that indicates a reasonable willingness to meet obligations as they become due. Past payment history is less important then current and future ability to pay your debt obligations.

Homes that qualify under the USDA Rural Development Loan Program in Massachusetts:

New and existing homes, including some manufactured homes.
Must be a single family residence or condo
No restrictions exist on the size or design of the dwelling financed, but must be considered “modest.”
Must be a residence, not a farm.
Must be located in a rural area. Rural areas include open country and places with a population of 10,000 or less. Under certain conditions, towns and cities with less than 20,000 population may qualify.
Plumbing, heating, water, waste disposal, and electricity must be certified as adequate, and the dwelling must be free from termites and dry rot. In some cases you can even finance any necessary repairs.
Homes with in-ground swimming pools are prohibited, but above ground pools are acceptable.

Go to USDA Rural Development Home Loans to learn more.

Please contact me if you have any questions about the mortgage process or about the USDA Rural Housing Loan Program in Massachusetts. Jeff Drew, 800-941-5616

USDA UPDATE:

Dramatic Changes proposed to USDA Rural Loans effective October 1, 2011 so you may want to act soon.

Beginning October 1, 2011, USDA Rural Loans "may" have annual mortgage insurance (similar to FHA, paid monthly) and will reduce the upfront guarantee fee on purchases from 3.5% to 2%. RD AN No. 4551 states:

Beginning October 1, 2011, it is anticipated that all purchase loans transactions will be charged (1) an up-front guarantee fee equal to 2% of the loan amount and (2) an annual fee of 0.3% of the unpaid principal balance.

Unlike FHA insured loans where the annual mortgage insurance premium ceases after 60 payments and the principal balance reaches 78% loan-to-value based on the original sales price or appraised value, USDA's annual fee NEVER terminates. It will remain a part of the monthly payment until the USDA mortgage is paid off. The annual fee will be reduced each year as it is calculated annually from the principal balance.

See below for a comparison:

Currently, if someone was obtaining a Massachusetts USDA mortgage with zero down payment to purchase a home in Massachusetts for $300,000, their loan amount would be $310,500 (sales price plus 3.5% for the upfront guarantee fee). Based on current rates of 4.375% (APR 4.607), their monthly payment (excluding taxes and home owners insurance) would be $1550.28.

Effective October 1, 2011 and assuming mortgage rates are the same the same for illustration purposes, the loan amount would be $306,000 (sales price plus 2% for the upfront guarantee fee) with a monthly principal and interest payment of $1,527.81 PLUS an estimated monthly premium of $75.82 = $1,603.63. An increase of $53.35 per month.

Why would someone even consider applying for a USDA mortgage after October 1, 2011 in Massachusetts? Well for one, it's one of the few "zero down" mortgage programs available for homes that are located in a designated rural area. Secondly, if the appraisal comes in higher than the sales price, borrowers may be able to finance closing cost... there are some additional benefits to this unique program and it may be worth your consideration if your income meets the guidelines and you're buying a home in a rural community.

Do you have questions about USDA or other types of mortgage programs for homes located in Massachusetts or on how to structure an offer to purchase? Call me at 800-941-5616.