whats the deal with USDA loans?

5 Replies

Hey BP, im staring out in California and like most im looking for some way to start with low to no money down for buy and hold. I heard of the USDA loans and not finding much information on how it works. 

I went to the website but its all government text and I need it explained in normal person way. 

If you're thinking of getting a USDA loan for an investment property, I'm sorry to say that you should forget it. USDA loans are only for owner occupied.

Don't worry though, the state of California has a specific grant program that can help you with the down payment - so long as you make less than a certain amount. The amount will vary from county to county and as I am up here in Washington state, I cannot tell you even an estimate.

Contact a mortgage broker or banker asked them about the NHF platinum program.

Anything more, feel free to private message me

Well, must be region or state specific as USDA has rural project loans for non-owner occupied, new developments. Apartment and mixed use, but not SFDs.  

You're looking at generally the Fannie-Mae guidelines with exceptions to LTV depending on need, as to condition or the property, exceptions to appraisal comps in areas that are economically distressed and/or underserved by conventional banking sources of funds.

Agricultural aspects are also allowed while the secondary market is much stricter on any business activity.

Here, they have made construction and repair loans, similar to FHA, they also do take-out end loans.

2-4 family dwellings can be done as owner occupied as well.

To be eligible for USDA you'll need the property to be located in a serviced area, smaller towns and rural development areas where commercial banks generally don't operate, the primary mission of USDA. :)

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I've done many USDA loans, the govie web site is good to determine if your area qualifies and if you personally qualify.  There are income requirements that limit the size of loan you'll qualify for.  I love USDA loans for the right borrower.  I live in Northern California, not the sticks, but Sonoma County and there are many areas around where I am that are USDA compliant.  Go to this website, its a USDA website, and you can search the "property eligibility" link to see if the address is valid for USDA funding.  Go also to the income eligibility section and input your income, family size, etc. and it will inform you if your are under the maximum allowed income.


Thanks for the reply guys I am looking more into it. In accordance with the area I live.

Thanks Patrick,  I'm going to look into NHF.

Hey Jesse, I live in the Stockton Modesto area. From the gov site I did not see any local brokers.  So I might message you for some more info. I did qualify for one of the mid income qualifications for my county according to the site guidelines.  But I have not looked into the area property qualifications. 

Yoao, my hometown is Manteca, CA!!! For over 20 years I lived there. Right now my office is based in Orange, but right now I have a transaction in nearby Modesto. I can help you if you are still looking. Are you?