Diane & Michael Koughan's Blog
The U.S. Department of Agriculture (USDA) offers multiple housing assistance programs for people hoping to achieve home ownership.
In spite of being offered by the USDA, you don’t need to be a farmer or rancher of any kind to qualify for a home loan. Similarly, you don’t have to buy a home miles from civilization--many popular, thickly-settled suburbs across the country also qualify for USDA programs.
In this article, we’re going to explain the different programs offered by the USDA, how to check your eligibility, how to find out which locations qualify, and how to get started with a loan.
USDA Assistance Programs
The USDA offers two types of home loans for prospective buyers. The direct program, or Section 502 Direct Loan Program, is designed to help low-income persons to acquire safe, affordable housing. The assistance for this loan comes in the form of a subsidy that can be applied directly to the applicant’s mortgage, reducing monthly mortgage payments for a certain period of time.
Another type of home loan offered by the USDA is the Single Family Home Guarantee. Much like an FHA or first-time homeowner’s loan, this type of mortgage is insured by the government. As a result, buyers can often qualify for lower interest rates and smaller down payments from their lenders.
Guarantees may be applied towards the purchase, rebuilding, or building of a rural home as an incentive to developing rural areas. Later, we’ll talk about what is considered “rural.”
Outside of help with buying homes, the USDA also provides grants and loans for repairing and modernizing rural homes.
Who is eligible for USDA mortgage assistance?
In general, those applying for USDA assistance must meet certain criteria. Applicants must meet income eligibility, be a U.S. citizen or qualified noncitizen, and must purchase a qualifying property.
For the Direct loan program, applicants must be without safe or sanitary housing and be unable to secure housing through other means. Whereas for USDA guaranteed loans, applicants need only fall under the maximum income limit.
To find out if you’re eligible immediately, fill out an eligibility form from the USDA.
How do I know which houses qualify?
Generally speaking, homes located within large, metropolitan cities won’t qualify for USDA loans. However, suburbs just outside of some larger cities often do. For example, towns located just a half hour’s drive outside of Boston have a good chance of being eligible.
To view the map of property eligibility, simply fill out the online eligibility form.
How Do I Get Started?
If you’re seeking a direct loan, you’ll have to contact your local Rural Development office. Applications for a direct loan are accepted year-round and are awarded based on funding availability.
For people looking for a private loan guaranteed by the USDA, applicants should contact an approved lender in the area. The lender will then work with the USDA loan specialist in your state.