USDA Loan Guidelines – Loan guarantee limits

1980.322  Loan guarantee limits

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The amount of the loan guarantee is 90 percent of the principal amount of the loan.

(a)  The maximum loss payment under the guarantee of Single Family Housing loans is the lesser of:

(1)  Any loss of an amount equal to 90 percent of the principal amount actually advanced to the borrower, or

(2)  Any loss sustained by the Lender of an amount up to 35 percent of the principal amount actually advanced to the borrower, plus 85 percent of any additional loss sustained by the Lender of an amount up to the remaining 65 percent of the principal amount actually advanced to the borrower.

(b)  Loss includes only:

(1)  Principal and interest evidenced by the guaranteed loan note;

(2)  Any loan subsidy due and owing; and

(3)  Any principal and interest indebtedness on RHCDS approved protective advances for protection and preservation of security.

(c)  Interest (including any subsidy) shall be covered by the loan note guarantee to the date of the final loss settlement when the Lender conducts liquidation in an expeditious manner in accordance with the provisions of §1980.376 of this subpart.

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