USDA Loans: What You Should Know

USDA loans are zero-down-payment mortgages for rural and suburban homebuyers.

Are you presently living in the city and looking for a change of scenery? Perhaps you feel more at home surrounded by pastures than pavement. If so, buying a home might be well within reach, thanks to the U.S. Department of Agriculture mortgage program. In fact, the USDA might have one of the government’s least-known mortgage assistance programs.

A USDA home loan is a zero down payment mortgage for eligible rural and suburban homebuyers. USDA loans are issued through the USDA loan program, also known as the USDA Rural Development Guaranteed Housing Loan Program, by the United States Department of Agriculture.

In 2017, as a part of its Rural Development program, the USDA helped some 127,000 families buy and upgrade their homes. The program is designed to “improve the economy and quality of life in rural America.” It offers low interest rates and no down payments, and you may be surprised to find just how accessible it is.

This loan is available to anyone looking for a residential property in an eligible rural or suburban area. The USDA’s definition of rural is pretty lax, so be sure to check their property eligibility maps to see if the area you’re interested in meets their definition.

There are many benefits that make this loan program appealing.

• No down payment

– You read that right. USDA loans allow buyers to finance a home for up to 100%* of the price so there is no down payment requirement.

• Lower credit scores are acceptable

– Don’t worry if you have less-than-perfect credit. Scores of 640 and higher will have faster processing, while 640 and below might face more strict underwriting standards.

• No loan limits

– The USDA does not have loan limits in place. That means your purchasing power may be higher than it would be with another loan program. Your lender will be able to help you determine how much you qualify for.

• Multiple property types

– Eligible property types include existing, new construction, condos, town homes, manufactured, modular, short sales or foreclosed homes.

What are the requirements?
  • Legal U.S. citizen and 18 years or older
  • The home must be for primary residence
  • Stable and dependable income
  • Adjusted household income is equal to or less than 115% of the area median income

Most other requirements for a USDA loan are very flexible, including credit and employment history.

Are you’re ready to leave the city behind? A USDA loan may be right for you! If you have questions about buying a home with a USDA loan, contact Shannon Carey or a licensed Mortgage Loan Originators. If you are ready to begin the home buying process, click here to get started!

*100% financing, no down payment is required. The loan amount may not exceed 100% of the appraised value, plus the guarantee fee may be included. **Only new manufactured homes are permitted, and they must come from eligible dealerships.