We all need a little help now and then. If you’re a resident of the United States, you may be eligible for a home loan from the United States Department of Agriculture. The USDA loans are meant to promote rural development through homeownership loans.
Many residents of the U.S. aren’t even aware that the USDA loans exist. Nor do they know if they qualify for the program. Find out more about the homeownership loans below.
What Are USDA Loans
It may seem odd that the Department of Agriculture offers home loan assistance. The agency also provides aid to farm owners or potential farm owners. In 2019, the farm ownership loans received a substantial increase. But if you’re not interested in owning a farm, the USDA loan could still help you!
The loan is meant to encourage homeownership in rural and suburban areas. It can also be used to renovate an already-owned home in a pre-approved location. Additionally, homes can be single-family or multi-family.
Unlike other real estate purchases, the USDA-approved homes do not require a downpayment.
The loan program has strict income criteria for loan approval. The loan only applies to select locations in each state. Applicants are only allowed one USDA loan per household. The loan is meant for lower-income families who cannot secure lending from other methods.
USDA Loan Qualification Guidelines
There are three types of USDA loans: loan guarantee, direct loan, and home improvement loans. Each loan has low-interest rates with no down payment requirement.
The income limit varies by region and family size. The USDA map details the income threshold for each state. Incomes as low as 26, 800 appears to be the lowest income requirement.
In addition to income-based, loans only apply to certain residential neighborhoods throughout the country. The USDA loan applicants also face a few other musts for securing the assistance.
- US citizenship, or permanent residency.
- A dependable source of income to ensure the monthly payments will be met.
- The monthly payments will be 29% of income.
- A passable credit history with nothing in collections for 12 months prior to application.
Furthermore, applicants with a credit score greater than 640 will find their application streamlined. Applicants with a lower credit score will be required to show references, such as a utility bill, or rent statement.
How to Apply For a USDA Loan
There isn’t an online application one can fill out for a USDA loan. There are two ways to apply for the loan. Contacting your local or state USDA office, and going from there. Or speak to a lender who participates in the program.
Properties in cities are typically excluded from eligibility. However, some metropolitan areas are included. Your state USDA office will know which lands are available for the USDA loan.
Many people think the USDA’s main focus is farming. However, they are also responsible for providing homeownership assistance through loans. Everyone should have a place to call home, and the USDA loan helps thousands of people realize their American Dream.