USDA Single Family Housing Guaranteed vs Direct – What’s the difference?

USDA Rural Development offers single family housing loans under two similar, but at the same time very different programs.

While this can lead to confusion among homebuyers and Realtors,  today’s video will break down differences between the USDA Single Family Housing Guaranteed Loan Program and the Section 502 Direct Loan Program!

Plus, you should click here and access our FREE USDA Resources, including our USDA Blueprint for Success. These are valuable tools to help walk you through the all important USDA qualifying process step by step.

USDA Single Family Housing Guaranteed vs Direct Loan Program

As a starting point, USDA Rural Development offers single family housing loans under both the Guaranteed Loan Program (“Guaranteed”) and the 502 Direct Loan Program (“Direct”).

Both programs require that the home being purchased is the primary residence, but they are still very different.

Here are 4 key differences between a USDA Guaranteed Loan and a Direct loan.

Income Limits

• While income limits do apply under both, the Guaranteed program has higher family household income limits when compared to the Direct loan program’s lower income limits.

Term Length

• Guaranteed loans only offer a 30 year term while the standard term for a Direct loan is for 33 years, with others terms applying based on varying situations.

In-Ground Pools

• Further, while the Direct program does not permit in-ground swimming pools, the Single Family Housing Guaranteed Loan Program does allow for in-ground pools.

Funding

• Lastly, and possibly the biggest difference, is that Direct loans are subsidized and funded by the government. They are then serviced by Rural Development’s customer service center.
• On the other hand, Guaranteed loans are not subsidized and instead are funded by approved USDA lenders such as Metroplex Mortgage Services who handle the underwriting review, approval of the file, and loan closing.

USDA Approved Lender

As many of you already know, we have specific systems in place that have helped us be a top ranked USDA Approved Lender year after year. We are able to handle the USDA qualification process from pre-qualification to closing with the added benefit of in-house underwriting and one easy point of contact.

Remember to call or email to discuss your scenario and let us show you the “Metroplex” difference!

(800) 806-9836 X 280
SeanS@MPLX.org

Make it a great week, download some of our FREE resources below, and I’ll see you next time!