USDA Loans for Michigan

What is a USDA Loan?

Prefer pastures over pavement? A Rural Development (RD) loan is ideal for buyers who want to buy homes in rural areas—with zero down payment. While Michigan RD loans often falls under the radar and are underutilized by big banks, we see their value for buyers and lead in the RD lending process. Also known as a USDA loan, it is backed and guaranteed by the United States Department of Agriculture. The RD/USDA loan offers 100% financing of the appraised value.

Besides VA loans, USDA loans are the only 0% down option available, and is the only program available to non-military buyers.

USDA loans can include closing costs, prepaid/escrow items, and the RD guarantee fee. RD Loans are subject to income limits and geographic location eligibility.

If you’re a veteran interested in an RD loan, be sure to check out our VA mortgages as well.

 

How do you qualify for a rural development loan?

USDA loans are one of many types of mortgages, but it is made specifically to make homebuying in rural areas achievable! Because of this, the guidelines are minimal. That means flexible credit, no purchase amount limits, and no assets needed!

  • Property must be in an eligible location
  • Must be single-family, owner-occupied home
    • Income must be below USDA-set limits
    • Minimum FICO score of 640
    • Property cannot be a working farm
    • The property’s appraisal must meet USDA standards

For the complete list of requirements & details on Michigan RD loans, contact a loan officer!

To find whether or not a certain property is within the eligible area for Michigan USDA loans, check out the USDA’s website for an interactive map.  Additionally, the income limits for USDA loans in Michigan depend on the location where you’re shopping for homes, in addition to your family size (and more!) Find your income limit for Michigan USDA loans at the USDA’s website.

 

USDA loan benefits

Having zero down payment on a Michigan home loan is a powerful tool. This is what Michigan USDA loans are known for— no down payment! When you have no down payment, you may be able to buy a home before saving up for a down payment (we can help, if you do need a down payment). If your Michigan-based property is not eligible for funding with a USDA / RD Loan, you may consider using the MSHDA, which only requires a 1% down payment.

Things to think about when getting an RD Loan

Is 100% financing right for me?

This is the main question we try to answer with you when considering a USDA loan. 100% financing with a Michigan USDA loan means a few things:

  • Higher monthly payments
  • Higher interest rates
  • Increased risk of being underwater in your loan
  • Mortgage insurance

Rural properties only, please.

Rural development loans are reserved for just that—rural development. Convinced you’ll buy a home in a rural area? Sweet! The USDA loan might be the tool you need. Still considering the possibility of city living? Consider holding off on the USDA loan.

USDA Loans are just another tool in the toolbox

There are many different financing options for a home purchase. As important as buying a home is, it’s important to use the correct tool in the toolbox. It’s the key to being a successful homeowner!

There is no loan type with a “one size fit’s all” label. Talk with a loan officer (at no cost or obligation to you!) to figure out the best approach for your situation. Our LOs are savvy. They’ll give you a hand.

 

What are USDA Rural Development loan rates?

If we could tell you right here, we most certainly would. Since loan rates fluctuate greatly day-to-day and week-to-week, our loan officers would love to give you an idea of what to expect on your loan.

Below is a graph of current loan rate trends for Michigan USDA loans. Loan rates vary between financing options, so rates may be different between FHA and USDA loans.

 

How to buy a home with no down payment in Michigan?

The answer to this one is easy! Give us a shout, and we’ll work with you to get the process started.

To get started, we usually need proof of income, assets, and ID. We’d also love to know which type of property you’d like to buy! A pre-approval will make or break your offer, so don’t pass up on a strong pre-approval!

We invest in our clients! They are our passion. Home loans aren’t the only thing we do for our clients— we do a lot more.

 

Frequently Asked Questions

How do I qualify for a USDA loan in Michigan?

To qualify, you’ll need to purchase a home in a location approved by the USDA, and the property must meet the USDA requirements. Additionally, the income limit for a family of 1-4 in Michigan is$91,900. For a family of 5 or more, it can be as high as $121,300. Income figures are determined specific to location and change frequently— our loan officers are able to provide additional details!

What are the benefits of a USDA/RD Loan?

USDA Loans in Michigan require no down payment, and the borrower qualifications are more lenient than other loan programs. While USDA loans don’t require mortgage insurance, there are other fees (annual and up-front) that are required for all USDA/RD Loans. Remember, only certain properties and property types are eligible for a USDA/RD loan in Michigan.

What is the difference between an RD loan and USDA loan?

Nothing! The “rural development” loan is offered by the United States Department of Agriculture. Both RD and USDA have become interchangeable names for describing this 0% down loan program.