USDA Home Loans

Are you planning on purchasing a home in a rural area? If so, then you may want to investigate USDA home loans as an option for your mortgage. USDA stands for the United States Department of Agriculture, and was put in place to provide support to the development of farming, rural properties and natural resources. There are criteria you must meet in order to qualify for one of these loans. If you do qualify, this could be the ideal loan program for you.

In 1916, the first USDA home loans were created through the Federal Farm Loan Act. These loans allowed farmers to purchase property an farming supplies. As time progressed, the program expanded to offer more property and loan programs with the goal of boosting the farming industry. These loans can also sometimes be used for farm expansions and renovations to property. So as you can see, this loan type can be flexible and meet the various needs of borrowers.

One of the main criteria you have to meet for USDA home loans are income requirements. Contrary to what you might think, income should be on the low side. The actual limits depend on the geographic area and its median income. Even though these loans are geared towards those with low income there must be proof that the borrower can make the loan payments with what they make. The payments are comparatively low because of the 30 year term and low fixed rates.

As previously mentioned, these loans are for people who want to purchase rural property, so the location is another factor to be met. You can find a list of areas that are designated as rural on the USDA site, organized by state. Your local office of Rural Housing Development can also give you this information. Your property must be located within an area that qualifies as rural in order to get a USDA loan.

With this type of mortgage, you cannot rent the property and must occupy it as a primary home full time. Also, you must not have any other property that could be a primary home. Your credit is another thing that lenders look at when you apply for USDA home loans. Although credit scores don’t need to be as high as they would with other types of mortgage loans, you will need reasonable credit in order to qualify.

The best place to start is to speak with a loan officer who handles USDA home loans and find out all the specifications needed to qualify. You may even be able to get pre-approved, which tells you how much of a mortgage loan you can qualify for. From there you can look around for the property you want, make sure it is within approved boundaries and continue with the mortgage loan process. Whether you want to farm or simply want to reside in a rural area this type of loan can help you meet your goals.