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What are differences between the USDA Direct and USDA Single Family Housing Guaranteed loan programs?

March 16th, 2018 by usdaadmin

Do you know that USDA Rural Development offers single family housing programs under both 502 Direct Loans and the Guaranteed Loan Program?

It is common for my office to receive questions on today’s topic and because of that I want to further explain and help separate fact from fiction.

And if you have not yet done so, feel free to download our newest “USDA Blueprint” with the link below.  This educational resource is designed to help walk you through the USDA process step-by-step and is a great educational resource for both homebuyers and Realtors alike.

What are differences between the USDA Direct and USDA Single Family Housing Guaranteed Loan Programs?

While we won’t be able to go into a complete analysis today, I want to keep you in the know by sharing basic differences between the two programs.

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

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While income limits do apply under both, Direct loans have lower income limits when compared to the higher family household income limits offered under the Guaranteed program.

Both programs do require that the home being purchased be the primary residence.

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.

Further, while the Direct program does not permit in-ground swimming pools, back on 12/1/14 the Single Family Housing Guaranteed Loan Program updated their guidelines and removed the previous in-ground pool restrictions that many of us remember.

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Now, because this is a very common question that I still receive, I want to emphasize that there are no problems with homes that have in-ground pools under the USDA Guaranteed program and we have been financing them regularly since those guidelines changed, which has been a major improvement as we all can agree!

Lastly, and possibly the biggest difference is that Direct loans are subsidized and funded by the government then serviced by Rural Development’s customer service center.

On the other hand, Guaranteed loans are not subsidized and instead are funded by approved lenders such as Metroplex Mortgage Services who handle the underwriting review and approval of the file.

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, and through that we are able to handle the USDA qualification process from pre-#1 Sebring FL USDA Approved Lenderqualification to closing with the added benefit of in-house underwriting and one easy point of contact.


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

(800) 806-9836 X 280

Let’s make it a great day and I look forward to seeing you right here for the next tip of the week!

Don’t forget to download our USDA blueprint for success with this link below:

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