USDA Loans

A USDA loan, also called a Rural Development Loan, is the most affordable home loan for a select group of qualified borrowers seeking to buy a home in an eligible rural area. Backed by the federal government, a USDA loan qualifies buyers to put no money down and receive 100% financing; plus, all closing costs are paid for by either the seller or financed into the loan.

Benefits of a USDA loan

  • No down payment
  • Competitive interest rates
  • 100% financing
  • Closing costs covered
  • Gifts and grants permitted from family, friends and non-profits

Who is Eligible for a USDA Loan?

There are 4 factors when qualifying borrowers for USDA loans:

  1. Credit Worthiness: When an underwriter reviews your credit history on a USDA Loan, the major thing they will be looking for is a history of paying your bills in a timely fashion. If you have had blemishes in the past, they may be overlooked as long as you have reestablished your credit over the past 12 months. Generally, any open judgments or collections will need to be paid off before you close on your new home.
  2. USDA Loan Income Restrictions: You will need to be able to document your income on a USDA Loan. USDA will generally want to see a two-year history of employment or consistent income. Exceptions on the two-year requirement can be made for applicants such as students. On a USDA Loan, assets are not required for approval, but can help overcome any possible blemishes on credit.
  3. Location: In order to qualify for a USDA Loan, your home must be located in a designated USDA rural area. You can check the USDA eligibility of your county. It might surprise you just how many areas of the United States do qualify for these no money down home loans. The goal of the USDA loan program is to help our nation's smaller, rural communities thrive by making land and property more affordable.
  4. Owning Additional Property: The USDA does not currently allow buyers to own another "adequate" property and buy another home by utilizing the USDA Loan program. The USDA loan is designed for those buyers who do not qualify for other financing and do not have adequate housing. However, there are certain circumstances when the USDA will allow you to keep the other home. For example, the USDA does not view mobile (manufactured) homes as adequate property. Other circumstances include if you have to move or if your current home is not adequately large enough for the size of your family.