While USDA loans are available to millions of people across the country, few people know about them. These loans are used by people who are aren’t interested in living in the big city and instead want to live out in the open or in small towns. And, according the the USDA, that “footprint” of eligible areas is probably larger than you might think!

USDA loans (officially the USDA Rural Development Guaranteed Housing Loan Program) are offered by the United States Department of Agriculture. There are some specific criteria that must be met, so let’s take a deeper look into these mortgage loans.

Why They Exist

As more and more people move to the city, the United States Department of agriculture wanted to make living in rural areas as attractive as possible to potential homeowners. This boosts the economic viability of rural areas, gives people a reason to stay in smaller towns, and helps those who have been affected by economic downturns in rural areas get a home loan that’s best for them.

100% Financing — Zero Down

One of the most appealing aspects of a USDA loan is that they offer 100% financing. That means that they require no down payment. In fact, closing costs can also be rolled over into the loan.


Mortgage Insurance is a Must

Because these are 100-percent financed loans, USDA loans require the addition of mortgage insurance to protect the program.

Simple Qualification Process and Criteria

Just because your loan comes through a government agency doesn’t mean that there’s tons of red tape. As we mentioned, the USDA wants to make their mortgage loans as easy to get as possible. That means making qualification as easy as possible on candidates. As long as you have reasonably-good credit, we’ll help you navigate the rest of the application process.

First-Time and Current Homeowners

This aspect of the USDA loan is very important, as it plays many roles. First, it encourages those who already own a home, such as retirees, to move to rural areas. Not only that, but it encourages those who own homes in rural areas to upgrade to better housing while staying in the area. Finally, it helps those who have grown up in small towns attain a mortgage as first-time homeowners.

Income Is A Factor

USDA loans are meant for those Americans whose income does not exceed 115% of the income for their area. That mean that you can make more than the average person who lives in your area, but not by much. Of course, you can also make considerably less. The amount of money you are allowed to make before you become ineligible changes county by country, so be sure to talk to someone at the Goldwater Bank about the country in which you live.

Investment Properties Are Not Eligible

While you might want to purchases houses in order to rent them out or flip them, USDA rural development loans cannot be used for this purpose. The house must be owner-occupied if you choose to get this loan.

It’s a Big Footprint!

While 80-percent of Americans live in cities, that doesn’t mean that 80-percent of the country is covered in city, does it? By some estimates, 97-percent of private land in the United States falls into the rural definition as decided by the USDA, a footprint that covers open land as well as small towns. If you’re unsure if the house you’re interested in would qualify, it’s always a good idea to check with a mortgage lender.

Blogs are great, but no blog you read should be taken as the end-all of advice when it comes to something as important as a home loan. Contact a professional who has up-to-the-minute information about mortgage loans at the Frederick Branch of Goldwater Bank. They’ll find out if you qualify for a USDA loan and help you find the best home loan for you!