2 years ago

Owning a home is a dream come true for many Americans, but it’s not always easy to finance your purchase. Many people get caught up in the idea of a standard 30-year, fixed-rate mortgage and don’t know that there are other options available that could save them money.

If you live in a rural area, you may be eligible for a USDA Rural Housing Loan. These loans are specifically designed for people who want to buy homes in rural areas and can offer some big benefits.

USDA rural home loans are one of the most misunderstood and underrated mortgage products available today. Here are some of the key facts you should know about USDA loans:

What Is a USDA Rural Home Loan?

A USDA loan, often known as a USDA Rural Development Guaranteed Loan, is a home loan program sponsored by the United States Department of Agriculture. For house purchasers who intend to buy a property in an area designated as USDA eligible, zero down payment loans are available through the USDA. USDA loans are an excellent choice for home buyers looking for a mortgage with no down payment and low mortgage insurance premiums.

While USDA loans are not just for agricultural workers, the program has a particular focus on assisting those who live in rural areas. In order to be eligible for a USDA loan, the property you wish to purchase must be located in an eligible area as designated by the USDA.

Eligible Areas for USDA Home Loans

The vast majority of the United States is USDA eligible. In fact, 97% of the country is designated as eligible for a USDA loan. The only areas that are not included are major metropolitan areas and any properties located within city limits.

However, the final determination of eligibility needs to come from Rural Development after you’ve submitted a completed application. USDA loan eligibility maps are available and are a great way to get a sense of eligibility but may not be perfectly accurate.

Why to Get One

The USDA loan program includes no down payment, low mortgage insurance premiums, flexible credit score requirements, competitive interest rates, and the option for the seller to pay up to 6% of closing costs and prepaids.

Another big benefit of USDA loans is that they are not just for first-time buyers. If you have previously owned a home, you can still qualify for a USDA loan as long as you meet the income guidelines and the property you wish to purchase is located in an eligible area.

If you’re thinking about buying a home in a rural area, a USDA loan could be a great option for you. With the possibility of no down payment, low mortgage insurance premiums, and other benefits, USDA loans are an excellent choice for those looking to finance their home purchase.

Are you Qualified?

You must be a US citizen and intend to purchase a primary residence in an USDA-eligible area to qualify for a USDA rural development loan. Your household income must be less than 115 percent of the median income in your region. You’ll also need a healthy debt-to-income ratio and a credit score of at least 640. If you’re unclear about your qualifications, a participating USDA lender can help you determine if you’re eligible.

What to Expect

The application process for a USDA loan is similar to other government-backed loans like FHA and VA loans. You’ll need to provide proof of income, employment, and credit history. The USDA will also look at your debt-to-income ratio to ensure that you’re able to make your monthly loan payments. Once you’re approved, the USDA will provide a loan guarantee to your lender, who will then give you the funds for your home purchase.

Income Limit and Down Payment

The total amount of money earned by your family determines USDA eligibility. In 2022, the income threshold for one- to four-person households is $91,900. The income limit for five-to eight-person households is $121,300. The cost of living is taken into account when determining USDA income limits.

There is no down payment requirement for a USDA loan. You can utilize USDA financing to cover the entire purchase price of a property. While you don’t need to make a down payment on your mortgage, you may do so if you want lower monthly payments or equity in your house after acquisition.


USDA rural home loans are an excellent option for those looking to finance their home purchase in a rural area. With no down payment, low mortgage insurance premiums, and other benefits, USDA loans are a great choice for those looking to buy a home.

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