USDA/RHS Loans

Rural Housing Service (RHS) loans (commonly called USDA loans) are mortgages backed by USDA Rural Development and issued by private mortgage lenders, such as Financial Concepts Mortgage, via the Single Family Housing Guaranteed Loan Program. The program was created to improve the economy and quality of life in rural America. 

The USDA provides a 90% loan guarantee for RHS loans. Because this high percentage guarantee reduces so much risk, Financial Concepts Mortgage is able to provide 100% loan financing with no down payments and low interest rates for qualified rural homebuyers. This helps homeowners in these rural areas purchase primary residences that are decent, safe, and sanitary.

When Are USDA Loans a Good Fit?

The Single Family Housing Guaranteed Loan Program is reserved for low- to moderate-income families living in rural areas who are looking to make homeownership a reality. You must have U.S. citizenship (or permanent residency status) to qualify. In addition, your family’s income can’t exceed the income limits set for your respective area and the property you wish to purchase must also be located within areas deemed eligible by the USDA.

USDA Loans in Oklahoma, Kansas, Texas, Arkansas, and Alabama

Financial Concepts Mortgage is licensed to provide USDA loans in Oklahoma, Kansas, Texas, Arkansas, and Alabama. There is no maximum loan size for the USDA loan program. The amount you can borrow is limited by your household’s debt-to-income ratio.

USDA Loan Benefits

USDA loans provide many benefits when compared to FHA loans or conventional loans. Our loan experts will help you decide which best fits your needs and situation.

• No required down payment 
• Low interest rates 
• Flexible credit score requirements
• No penalties for prepayment
• Can be used by both first-time home buyers and previous homeowners 
• No required homeowner counseling 
• Closing costs and mortgage insurance premiums may be financed into the loan 
• 30-year fixed rate and 15-year fixed-rate mortgages are available
• Lower mortgage insurance rates than FHA or conventional loans

USDA Loan Requirements

You must meet certain requirements to qualify for USDA loans. For starters, you must meet the USDA’s “ability to repay” standards, which include:

• Holding a steady job and income (as proven by tax returns)
• A credit score of at least 640 (although this can vary by lender)
• A debt-to-income ratio of 41% or less

Other requirements include:

• You can’t make more than 15% above the local median salary 
• Family income can’t exceed the limits set for your area
• Property must be located within eligible rural areas
• Loan can be used for single family homes only, no duplexes 
• Mortgage insurance is required for USDA loan applicants (1% upfront fee plus 0.35% annual fee based on remaining principal balance)

Other USDA Loan Programs

The USDA also offers the following home loan programs:

• Single Family Housing Direct Home Loans: This program is offered directly by the USDA and provides payment assistance to increase an applicant’s repayment ability. Payment assistance temporarily reduces your mortgage payment. These loans are reserved for those who can’t obtain a loan from other resources. 
• Single Family Housing Repair Loans and Grants: The program provides loans to very-low-income homeowners to repair, improve, or modernize their homes. Grants are also provided to elderly very-low-income homeowners to remove health and safety hazards from their homes.