The USDA Rural Housing refinance program is for those that already have a USDA rural development loan in place. Unless your current loan is a Guaranteed Rural Housing loan or a USDA Section 502 Direct loan, you cannot refinance into the program. The USDA Refinance is designed to lower the interest rate on a current USDA mortgage and is only available with 30 year fixed rates. Generally, these refinances are streamlined and can be done with ease. In some cases, we won’t need an appraisal if the borrower is willing to pay their closing costs out of pocket.
When doing a USDA refinance, The borrower must see a $50 or greater reduction to their principal, interest, and mortgage insurance payment. Plus, you will not be able to receive cash out at closing or pay other debts with your equity. This also means we cannot pay off any subordinate financing such as a line of credit, 2nd mortgage, or grants. Those liens must be subordinated or paid off. This loan is meant to improve your housing payment.
Additionally, borrowers can be added but only deceased borrower may be taken off during the refinance. All borrowers must still qualify under the USDA guidelines.
A few other requirements will include:
- Your current loan must be secured by the same property as the original loan.
- The original loan must be Guaranteed Rural Housing (GRH) or USDA Section 502 Direct only. This Program may not be used to refinance FHA, VA, or other government or conventional mortgages.
- 30 Year Fixed rate only
- The existing loan must have closed at least 12 months prior to the application date.
- Owner Occupied principal residence only
- View current USDA Guarantee and Annual fees
- Income limits apply and can be viewed from the USDA Rural Housing program page of our site.
- Refinance loans are permitted for properties in areas that have been determined to be non-rural since the existing loan was made.
- Escrows required
- An appraisal is not required
- Additional borrowers may be added to the new loan but only deceased borrowers may be removed from the current loan. All applicants must meet all eligibility requirements.
- Things that can be financed include the loan payoff, upfront guarantee fee, reasonable and customary closing costs, and prepaid items.
- No late payment for the 12 months prior to the application date
- Important Disclosure
For all USDA mortgage loans, property and income restrictions apply.