USDA Rural Development Loan: The 100% Financing Loan That’s Not “Just for Farmers”
The USDA rural development loan program was launched in the 1990s. It was recently updated and revamped to better appeal to people trying get into properties that are designated eligible suburban and rural areas by the USDA loan guidelines. In order to qualify for the USDA loan program, the first requirement is that the property is designated eligible by the USDA loan database. It is also worth noting that USDA loans cannot be used for investment properties or vacation homes; this loan is for primary residences only.
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Location of the property is key in qualifying for a USDA loan, and it is determined on a property by property basis according to zip code and county. Qualifying for a USDA loan has very similar requirements to qualifying for a FHA loan. In order to qualify for the USDA loan program, you will be expected to be able to document your current income, have decent credit (as of December 1, 2014, the USDA implemented a minimum credit score of 640), and generally show that you have the financial ability to repay the loan.
USDA Loans: Very Popular Loans
Until FHA did away with their third party down payment assistance programs, the USDA loan program wasn't all that popular. But when FHA eliminated all third party down payment assistance programs, the USDA loan exploded in popularity. Today, many homeowners who are thinking about buying a home are surprised to learn that many properties qualify for a USDA loan even though they can hardly be considered "rural."
USDA Rural Development Loan Lenders
The USDA rural development loan program is administered through a network of lenders who are USDA approved lenders. Not every lender is USDA approved, and not all lenders have the same level of expertise when it comes to helping you with a USDA loan.
When choosing a lender to work with to get a USDA loan, be sure to shop around so that you not only get a lender that is USDA approved, but also one that has experience and knowledge when it comes to the ins and outs of USDA loans.
Highlights of the USDA Rural Development Loan Program
- The USDA loan program works through USDA-approved lenders that lend money that is insured against default by USDA
- The USDA loan program offers 100% financing with reduced mortgage insurance premiums and is a true no-money-down option when buying a home
- USDA loans can be used when buying a new home or refinancing an existing mortgage
- The USDA loan program is not "just for farmers," and many people are able to qualify
- For full information on eligibility, visit the United States Department of Agriculture’s page here
If you are interested in learning more about the USDA loan program, be sure to speak with a loan officer at a lender that is approved to lend under the USDA loan program and has experience with helping people finance their homes with USDA loans.
Any questions about the USDA rural development loan? Have you used this loan before?
Let me know with a comment!