Rural Development loans are very popular among first time homebuyers, and even people that have purchased homes in the past. Rural Development is a government program that has very specific requirements for the potential borrowers, as well as requirements for the geographic location of the property being purchased.
RD loans require the lowest down payment, and even allows for financing of the closing costs as long as the home appraises out high enough. RD loans charge a monthly and upfront guarantee but it tends to compare favorably to other loan types. Also, there is a requirement to escrow taxes and insurance into the monthly payment.
Rural Development does not allow you to own another home while using their program for financing. In the event that you already own a home, you would need to seek alternative financing.
Rural Development has an income limit based on the county you are purchasing in. The income limit will include all income from any individual that will be living in the residence being purchased, even if that individual is not going on the application. If there is additional income from other people that will be living in the residence that will not be on the application, that income must be included into the Maximum Income Calculation, but WILL NOT be used in the application as qualifying income.
Properties that are eligible for Rural Development financing must be located in specific Rural Development areas. These areas are geared away from larger metropolitan areas. To determine whether or not the area you are looking at is eligible for Rural Development financing, go to http://eligibility.sc.egov.usda.gov.
Finally, Rural Development allows for the refinance of a current Rural Development loan providing the main criteria for a Rural Development purchase can be met. However, if the home you purchased originally with a Rural Development loan is no longer in a Rural Development eligible area, you may still be able to refinance the existing loan.