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Rural Development Loan Guarantee

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.

Mountains in Montana

MBOH Guidelines for RD guarantee loan:

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:
Single family home, townhouse, detitled manufactured home on permanent foundation or condo unit (MBOH will purchase loans on up to 25% of units in a project).

Purchase Price (click here)

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.

Montana lake surrounded my mountains

Loan Criteria:

Rates depend upon finance option

30-year fixed rate loan

IRS recapture potential

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 of closing costs or down payment to come from borrowers personal funds

Reduced to $500 for borrowers completing approved Home buyer Ed course

Other sources must be approved by RD

MBOH pays a portion of closing costs for the borrower.

Lender Reservation and Loan Info:
MBOH regulates points and fees that can be charged. Consult Board staff with any questions.

Reservations are valid for 60 days for existing homes and 180 days for new construction

A 0.25% fee charged for extensions, 0.50% for cancellation

Need any multi-lot/repair issues on appraisal addressed before closing


Reservation Process:

Input on Lender On Line web based reservation system
Fax Borrow Stat Sheet and Homebuyer Education Certificate

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

This is a summary of the MBOH program only. For a complete copy of the terms and conditions see Mortgage Purchase and Servicing Guide or Terms and Conditions for Whole Loans (June 2, 2014).

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