Rural Development Program

United States Department of Agriculture - 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 MBOH regular bond and set-aside loan programs.

Borrower Eligibility Criteria:
Income limits (click here)
First-time homebuyer(s); waived for targeted area
Home must be primary residence for the life of the loan
No asset limitations

Property Criteria:
Purchase limit of $237,031 for new and $200,160 for existing properties
Single Family home, townhouse, or condo, existing home or new construction
Manufactured home must be new, from approved dealer, on a foundation engineered both site-specific and home-specific
Business use limited to 15% of property
Land limited to 35% of value of property
Maximum parcel size of 40 acres, with no subdivision of land possible

Loan Criteria:
Loan limit of $200,160
Rates depend upon finance option
30-year fixed rate loan
No origination or discount points charged at closing
IRS recapture potential depending upon program used
Buy existing or build new home
Hazard insurance $1,000 deductible all peril; escrow for tax and insurance

Underwriting Criteria:
Per RD guidelines

Down payment Sources:
MBOH requires $1500.00 from borrowers personal funds
Reduced to $500 for borrowers completing approved Home buyer Ed course
Other sources must be approved by RD

Lender Reservation and loan info:
No origination or discount points, MBOH purchases loan at 102%
Rate can be reduced 0.125% if buyer chooses to pay 2 points at closing and MBOH purchases loan at par
Reservations valid 120 days for existing homes/ 180 days for new construction
There is a 0.25% fee charged for extensions and a 0.50% fee for cancellations.
Need any multi-lot/repair issues on appraisal addressed before closing

Reservation Process:

 PREFER
Input on Lender On Line web based reservation system

OR
Fax reservation to MBOH including:
Reservation cover sheet and required documentation listed

updated 1/23/06

This is a summary of the MBOH program only. For a complete copy of the terms and conditions see Mortgage Purchase and Servicing Guide and the Terms and Conditions of the set-aside