USDA Mortgage Eligibility

The USDA Home Loan Program is officially referred to as “USDA 502 Guaranteed Rural Housing Loan Program.” It is designed for both individuals and families who have low to moderate incomes. However, it is important to note that the low to moderate term is used in the broad sense and many people do qualify.

The USDA offers a zero down payment home loan program with affordable terms to make the dream of home ownership a possibility for thousands of individuals every year. The USDA Home Loan Program also benefits the rural parts of the country, by attracting residents to these areas. Fortunately, around 97% of the United States is designated rural for purposes of the loan, so many properties do qualify.

Benefits of USDA Loans

  • No Down Payment – The most attractive benefit for many buyers is that the USDA loan allows you to buy a home with no money down. Purchasing without needing to put 20% down allow many people to get out of the rental cycle.
  • Low Interest Rates – The USDA loan itself offers attractive interest rates that can save home buyers money over the life of the loan.
  • No Cash to Close Options – Closing costs don’t have to be a problem. These can be paid through gifting, could be covered by the seller as part of a negotiated deal or may even by able to be financed as part of the loan amount.
  • Flexible Credit Criteria – While there are credit requirements, they aren’t set in stone but instead include a review of credit history. This makes it possible for more people to qualify.
  • Ideal for Low to Moderate Income Families – The USDA Home Loan Program was developed with the needs of low to moderate income families in mind. However, “low to moderate income” is a broad term. The requirements are simple and can be met by many.
  • Not Only for First Time Homeowners – Unlike some lending programs, even those who have owned homes in the past can also qualify. The flexibility as far as this goes is appealing and allows for more qualifications to go through smoothly.
  • Affordable Mortgage Insurance – Mortgage insurance is tied to the principle balance. Premiums decrease as the loan balance decreases.