USDA loans – what are they – what’s the difference between direct and guaranteed?

USDA Direct Loans – are loans that are directly funded by the Government.  These loans are available for low and very-low income individuals or households purchase homes in “rural” areas.  In Kootenai County, rural areas include Post Falls and Rathdrum (as well as other outlying rural areas).

USDA Guaranteed Loans – these loans are available for individuals and households with an income up to 115% of the median income for the area.

We recently started working with a buyer who said they were getting a USDA Direct Loan, that they were working with a lender in Utah (for an Idaho loan) and that the lender told them they needed to pay $75 for a rapid re-score.

RED FLAG!!

First of all, NO one can finance a USDA Direct Loan except USDA themselves, directly, in the STATE you wish to purchase in.

Second of all, USDA does NOT charge for rapid re-scores.

Third, if you are being told you are getting a USDA Direct Loan and you are working with someone other then the local USDA office, you are being qualified for a USDA Guaranteed Loan, not the Direct Loan.

Fourth, if your lender is asking for costs for things up front (like rapid re-scores, credit checks, appraisals, etc) – WALK AWAY.