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What is USDA Rural Development in Michigan?

Man and little girl walking in countryMichigan bore the brunt of a slowed down economy with a real estate market that saw the value of homes and demand fall. The market is on an upswing in most states and this includes Michigan.


USDA Rural Development is doing a lot to improve the real estate market by making it easier for those who wish to invest in property in rural Michigan to do so. You may be asking what is USDA rural development in general, not just for Michigan. The short answer is that it's a mortgage option that helps families buy their homes with very little cash needed at the closing table. Let's take a closer look at what that means for Michigan home buyers.

Since 2011, at least 7, 051 families in the Great Lakes State have been able to purchase homes thanks to the Michigan USDA rural development. The program offers assistance in various categories including loans and grants for business programs and community programs. For homes, assistance is given for multi-family financing and single family financing.


The Single Family Housing Program offers assistance to families living in rural Michigan who are in the low and moderate income bracket.  This is done through a number of loan and guarantee programs. Financial assistance for home improvements to make a home safe and ensure it has good sanitation is also offered.


man and woman walking across a bridgeOne form of assistance that the Michigan USDA Rural Development offers is direct home loans. Under this program, an individual or family can get financial assistance directly from the program. They are offered home loans with reduced interest rates.

The majority of Direct Home Loans are given to people or families whose income is below 80 percent of the median income level in the communities that they live.  Yearly income cannot exceed the amount that USDA has set for the particular county in which ones wishes to buy or construct a home.  With the program offering loans to those who would not qualify for a conventional loan, it helps many who would otherwise not have been able to get a mortgage to be able to own a home.  The loans can be taken to buy a ready home or to construct a new home. 


The Home Repair Loan and Grant Program is the second kind of USDA rural development loan that is available for rural Michigan residents.  It is given to people or families who have very low income whose homes need to be repaired. Assistance is given in form of grants and loans for carrying out renovations.  The funds are also granted the for use of making a home more easily accessible and comfortable for someone who has disabilities.


Guaranteed Home Loans are the third kind of loan that the Michigan USDA rural development offers.  Under this program, the USDA guarantees loans that are given by lenders in the private sector. This means that in case a borrower defaults on their loan, it will be paid by the USDA.  Individuals collaborate with the private lender and makes the repayments to them. 


With Guaranteed Home Loans, it is allowed for the individual or family to borrow up to 102 percent of the appraised value of the home. This  means that a down payment is not necessary.  For most people, one of the major hindrances to owning a home is saving up enough money to put down a deposit. Being able to borrow this much makes a big difference to many people in rural Michigan.



Loan processyoung couple shaking hand with business person

The process of getting a USDA is quite similar to that of getting a FHA loan or a traditional mortgage. It takes between two weeks and 30 days for the process to be complete, from the time of application to when approval is received. With USDA loans however,  a state USDA office must give approval.


Co-borrowers are allowed on a USDA loan.  The program allows for four transactions on one single transaction. The income of every borrower and even those who are not borrowing but will be occupying the house to be bought or built is considered when qualifying income is being calculated. 

Eligibility Criteria 

To be eligible for the loan, the property that one wishes to buy or construct must be located within a rural area that has been certified by the USDA.  However, this does not mean that the loans are only available to those who live in farming areas.  There are several areas that qualify that are in different parts of Michigan. As a guide, areas that qualify have to be located outside major metropolitan areas and their population must not exceed 20,000 residents. 


Online forms are available where you can check if your county is eligible and the income limits depending on the kind of  loan one wishes to secure. Application can also be done online as well. You can also calculate your mortgage payment. With incentives like no deposit required,  no mortgage insurance, no maximum loan amount, no collateral required,  lowered interest rates and closing costs included , the Michigan USDA rural development loan has made the dream to own a house possible for many who were locked out by these requirements.


Find out what other options you have as a home buyer with "The  Mortgage Loan Option Guide " at the button below. The free guide covers USDA rural development and other low-down payment mortgage programs, as well as other options. It's your chance to compare USDA rural development vs FHA loans, and more.

Loan Options Guide

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