Rural Development (RD) Mortgage Guarantee Program
Brief Description: The RD guarantee program provides a loan guarantee for homebuyers in rural areas, allowing an alternative to conventional loan products that often require large down payments. As of January 2006, all of Montana is eligible as a rural area, with the exception of the properties lying within the city limits of Billings, Bozeman, Great Falls, Helena and Missoula. The RD-guarantee program partners well with most down payment assistance and Montana Housing regular bond and set-aside loan programs.
Montana Housing Guidelines for RD guarantee loans
Borrower Eligibility Criteria:
- Income limits
- First-time homebuyer(s); waived for targeted area
- Home must be primary residence for the life of
- No asset limitations
- Single family home, townhouse, de-titled manufactured home on permanent foundation or condo unit (Montana Housing will purchase loans on up to 25% of units in a project).
- Purchase Price Limits
- Limit of 15% for business use.
- Land limited to 35% of value of property on new construction that has private water or sewer.
- Maximum parcel size of 40 acres, with no subdivision of land possible.
- Must be in rural area eligible for RD loans.
- Manufactured home must be new, from approved dealer, on a foundation engineered both site-specific and home-specific.
- Rates depend upon finance option
- 30-year fixed rate loan
- IRS recapture potential
- Buy existing or build new home
- Hazard insurance deductible is the greater of $1,500 or 1% of dwelling coverage except for Wind/Hail is the greater of $2,500 or 1% of dwelling coverage; escrow for tax and insurance.
Down payment Sources:
- Montana Housing requires $1,500.00 of closing costs or down payment to come from borrowers personal funds (CANNOT USE GIFT FUNDS)
- Reduced to $500 for borrowers completing approved Home buyer Ed courses.
- Other sources must be approved by RD