Rural Development Home Loans For Homebuyers In Montana

USDA Rural Development Loans

As Montana’s population continues to grow, the thought of moving to a rural area is becoming more appealing. Rural living has so many benefits. Fewer people, quieter, slower pace of living, room for your pets to run around…I could go on and on. 

If you're one of the many who are thinking about making a move to rural Montana, you should know about the USDA Rural Development loan. Let's dive in and discuss more about this loan program and why you should consider using one to purchase a home.

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What Is a Rural Development Loan?

 

A Rural Development loan, commonly also known as an RD loan or USDA loan, is a type of mortgage available to home buyers who are purchasing a primary home in a less populated area. These loans are guaranteed by the U.S. Department of Agriculture and have some very specific requirements, mostly pertaining to the type of property and its location. Location is key. For example, homes inside of Bozeman city limits are ineligible for RD financing. 

Can Anyone Qualify for a USDA Rural Development Loan?

In addition to the property requirements, borrowers hoping to obtain an RD loan must be within the income limits set by the USDA. One of the goals of this type of financing is to provide "safe and sanitary" housing for low and moderate-income households. The income limits vary based on location and the number of people in the household.  Income limits are evaluated yearly. As of November 2021, for a family size up to 4, the income limits in Montana range from $91,900 up to $103,950. Gallatin County currently has the highest income limit in the state at $103,950 followed by Lewis and Clark at $101,050. The income limit does increase for a family size of 5+. The borrower must meet the minimum credit score requirement and show proof of being able to afford their current monthly obligations plus the new mortgage payment. 

 

What Are The Advantages Of a Rural Development Loan?

Possibly the largest benefit of the Rural Development loan is that it does not require a down payment. A no-down-payment home loan is ideal for low to moderate-income earners who have the money to make a monthly mortgage payment but may not have enough left over to save up for a down payment. 

 

Another benefit of this loan is that they cost less than other loan programs. The RD loan has an annual fee associated with it that is collected monthly for the life of the loan. For 2021 that is 0.35% of the loan amount. This monthly fee is similar to private mortgage insurance on a Conventional or FHA loan, but it is less expensive on a monthly basis. The RD loan typically has lower interest rates than other loan programs as well. These benefits will result in huge savings not only on a monthly basis but over the life of the loan. This allows you to keep your hard-earned money in your pocket.

How Can I Get A USDA Rural Development Loan?

If you'd like to see if the USDA Rural Development loan would be an option for you as you start your rural Montana home search, please contact me. I'd love to answer any questions you may have and help you through the home loan qualification process.