The U.S. Department of Agriculture offers a loan program similar to that of an FHA or VA loan. The program is called a USDA mortgage loan, and it was designed for low and moderate income borrowers who are located in rural areas. USDA loans are a great choice for anyone who has a limited amount of savings. Typically, there is no down payment required. However, borrowers must pay an upfront fee and a monthly fee for mortgage insurance.
One major key step to getting a USDA loan is making sure the property that you’re purchasing is USDA eligible. The subject property must be located in a rural area approved by the U.S. Department of Agriculture. You can do this by using their online tool.
In addition to property eligibility, borrowers must meet certain income requirements, and have an ability to repay the loan. Borrowers must also agree to occupy the property as their primary residence. This means that you cannot get a USDA loan for an investment property.
What Does This Program Do?
“This program assists approved lenders in providing low and moderate income households the opportunity to own adequate, modest, decent, safe, and sanitary dwellings as their primary residence in eligible rural areas. Eligible applicants may build, rehabilitate, improve or relocate a dwelling in an eligible rural area. The program provides a 90% loan note guarantee to approved lenders in order to reduce the risk of extending 100% loans to eligible rural home buyers. – USDA
Why Does The U.S. Department of Agriculture Offer This Program?
“This program helps lenders work with low and moderate income families living in rural areas to make home ownership a reality. Providing affordable home ownership opportunities promotes prosperity which in turn creates thriving communities and improves the quality of life in rural areas.” – USDA