USDA Home Loans

USDA Loan Programs

A USDA mortgage loan, sometimes called a Rural Housing Loan is a program guaranteed by the United States Department of Agriculture. A home buyer must select a home as their primary residency in a qualified USDA area and must meet USDA income eligibility requirements. Main advantages:

  • No down payment is required, you may finance up to 100% of the property value
  • The 2% guarantee fee and all other costs may be added to the loan
  • USDA home loans do not have a specific loan size limitation
  • Refinance your present USDA home loan via USDA Streamline Pilot Refinance Program that requires no appraisal and all closing costs can be financed

The Department of Agriculture is using this program to make it easier for individuals and families with limited incomes to purchase property in outlying or low population areas. Working with an area Realtor that knows where to locate a property that qualifies would be helpful. Purchase or Refinance, a USDA loan is an option that may be worth considering.

And if you already have a USDA loan, streamlining USDA refinances (USDA to USDA) is simple and requires very little paperwork. Click on the link below if you are ready to get started. More on USDA loans further below.

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USDA Home Loans

USDA mortgages are designed for people in rural areas who need them the most

U.S. Department of Agriculture (USDA) home loans open up the dream of owning a home to people in low-population areas who otherwise could not afford it. If you live in a place with a population of less than 35,000 and you can’t qualify for a conventional loan, you may qualify for a USDA guaranteed loan. This mortgage program could be your answer to homeownership.


  • The United States Department of Agriculture (USDA) provides mortgages to the people in rural areas who need them the most.
  • Qualification standards for these home loans are lenient compared to those of other mortgages, but you will need a steady income that’s high enough to repay the loan over 30+ years at a fixed interest rate.
  • The definition of “rural” includes areas with populations as high as 35,000.

What Is a USDA Home Loan?

A USDA home loan is a mortgage guaranteed by the United States Department of Agriculture’s Rural Housing Service agency to help households with very low to moderate incomes purchase safe and affordable homes in rural areas. The Section 502 loan program has operated since 1949. Today, it provides low-cost financing to buy a home through the Section 502 Guaranteed Loan. The program provides 100% financing to eligible borrowers.

The USDA Home Purchase Loan

The USDA Guaranteed loan program provides housing in rural areas and offers no-down-payment financing. For USDA Guaranteed loan programs, you cannot be delinquent on any federal debt and must be a U.S. citizen or legal nonresident alien.

Guaranteed USDA Loan

By guaranteeing 90% of the loan amount, the USDA makes it feasible for mortgage lenders to offer 30-year, fixed-rate loans with no down payment. You can use a guaranteed USDA loan to buy, construct, repair, renovate, or relocate a primary residence. Individual lenders determine the interest rates they’re willing to offer borrowers on these loans, so it’s important to shop around. Here’s how to qualify:

  • Down payment: 0%.
  • Assets: None.
  • Debt-to-income ratio: 41%. If you show a history of spending more than 41% of your income on debt payments while still meeting all your financial obligations, you may still qualify.
  • Credit score: No minimum, as long as you can demonstrate an ability and willingness to repay the loan. It may be easier to qualify with a score of at least 640. However, you may still qualify if your score is lower or if you have no score. You will have a stronger case if you don’t have delinquent payments on your credit report or if you can provide a history of on-time rental payments or other positive sources of nontraditional credit.
  • Income: Low to moderate income, not to exceed 115% of the area’s median income. Must not qualify for conventional financing without private mortgage insurance (PMI). One-year history of traditional employment or two-year history of self-employment or seasonal income.
  • Property location: Must have a population of 35,000 or less. This means many suburban areas qualify, not just rural ones.
  • Property type: Primary residence, non-income-producing. The property cannot have an in-ground swimming pool.
  • Home size: Must be considered modest for the area.
  • Property size: Must be typical for the area.
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