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Rural Home Loans Offer Incentives for DSM Homebuyers

Rural Home Loans

January 3, 2024

Buying or building a new home is an exciting process that includes many steps such as picking finishes, choosing your preferred location and most importantly, securing the proper financing based on your needs. Whether you’re a first-time homebuyer or looking to get the most bang for your buck, there are numerous financing options to consider.

If you prefer to live in a more rural setting, possibly a city with a smaller population or backing to the countryside, you may be interested in the U.S. Department of Agriculture (USDA) 502 Direct Home Loan Program which can offer no down payment, no closing costs, and a low interest rate*.

In 2017, as part of its Rural Development program, the USDA helped more than 125,000 families upgrade or buy their homes throughout the nation. These lower interest rate loans on new construction homes can be used on production homes — homes that are already in the process of being built or recently finished — or on fully custom homebuilding.

Thanks to an expert team and plenty of housing options, Hubbell Homes and Origin Homes can help you apply, qualify and create your home quickly and efficiently.

With all types of mortgage loans to choose from, how do you know whether the USDA loan is right for you? Check out our overview below!

USDA 502 Direct Home Loan Overview

  • $0 down payment (Fun Fact: The average down payment in the U.S. is roughly 6% of the loan value. If you purchase a $300,000 home, a $18,000 down payment could be expected.)
  • $0 closing costs — save it for future improvements; USDA estimates a homebuyer's closing costs to be around $2,500 to $3,000, but many times the buyer is able to roll them into the loan dependent on the appraisal
  • 5.125%* interest rate on a 33-year or 38-year mortgage
    • While this lower interest rate is evaluated monthly, the current mortgage rate is near 7.25% in Iowa. This reduced interest rate can equal significant cost savings over the loan term.
  • Fair or OK Credit Score (You must have a credit score of 640 or higher for streamlined processing. If you fall below 640, you will still be considered but may need to meet more standards.)

Other qualifications can include funding for only owner-occupied primary residences, you must have a dependable income for a minimum of two years, U.S. Citizenship (or permanent residency), and a variety of debt ratios will be considered based on your monthly payments and credit score.

What Types of Homes Generally Qualify?

Homes need to be less than $377,600 in value. Rural towns and locations with populations less than an estimated 20,000 qualify for USDA home loans.

Metro areas with a population greater than 20,000 are generally excluded from loan qualifications, but there are some low population suburbs that qualify! There are a few exemptions closer to the Greater Des Moines (DSM) area, like Carlisle and Bondurant which also qualify!

Home Options

Hubbell Homes & Origin Homes are making it easier than ever to apply for this type of home loan through a loan program specialist and specific home plans:

Hubbell Homes offers a variety of homes that are in various stages of construction within Danamere Farms in Carlisle and the Featherstone community in Bondurant, both communities that qualify as well as a few other locations around the region. Prices for these homes range from low-200's up to the loan maximum. These homes have monthly payments as low as $1,380*!

Origin Homes, a semi-and-fully-custom rural homebuilder, will build in any of Iowa’s 99 counties and has a handful of plans that qualify for USDA financing. These plans can be semi- or fully customized and, in many cases, monthly payments can be as low as $1,100.

Origin Homes is also building five homes in Knoxville, Manning and Gowrie for a total of 15 homes that are for sale right now. These smaller footprint homes all qualify and will start in the $250’s. The homes are expected to be complete in spring and summer of 2024.

  • Knoxville: The homes being built within the Veterans District will feature roughly 1,340 square feet of main floor living space, two bedrooms, two baths, two-car alley-loading garages and an optional basement finish. The Cline plan from Origin Homes will be offered with three exterior elevation choices and three pre-selected interior finish packages.
  • Manning: The city of Manning is currently developing 20 pocket-sized lots and 16 traditional sized home lots in the Stadium View Neighborhood, the largest home building division in the city’s history. Within Stadium View is a “pocket neighborhood” that features the 20 lots with Origin designed homes with alley-loading garages, shared green spaces and connected walking trails.
  • Gowrie: The Wiley Addition in Gowrie is an already established neighborhood looking to expand with more homes starting construction in late 2023. The Origin Homes Chestnut plan will feature 1,300+ square feet with two or three bedrooms, 2 baths, a two-car garage and an optional basement finish.

Next Steps

Hubbell Homes and Origin Homes make it extremely easy to apply since they work directly with a specific USDA loan program specialist who will help gather your information and materials, so your application is complete upon application. Loans can be approved in as little as seven to 30 days!

If you run into any loan qualification issues, our team is here to walk you through the options whether that's offering a home and a different loan through our preferred vendors that still meets your needs and budget.

Visit any of the links above to see what homes are available right now or coming to the market soon. This loan program can be utilized on any for-sale home that meets the price and location qualifications!

**Fixed rate mortgage Direct Loan Program. Qualifications are based on credit history, income, location of home, home value. Primary residency restrictions apply.

With the #7 Lowest Cost of Living in the U.S. and a Top Metro for Number of Economic Development Projects (among metros with a population of 200,000 to 1 million), Greater Des Moines (DSM) is a region where you can have it all. Learn more about what it’s like to live here.

Origin Homes

Origin Homes is a rural, build-on-your-land homebuilder who focuses on custom, semi-custom and rural workforce housing. Origin will travel to all 99 counties.