USDA Loans: Zero Money Down Home Loans for Rural and Suburban Areas
USDA Loans: Zero Money Down Home Loans
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USDA loans, zero money down, home loans, rural development, USDA mortgage, USDA loan requirements, USDA eligibility, rural homebuyers, mortgage assistance, no down payment, USDA income limits
Understanding USDA Loans:
Affordable Home Financing with No Money Down
Have you come across USDA loans during your home search and wondered what they are? Are they only for farms? Let's clear up some misconceptions.
What Are USDA Loans?
Contrary to popular belief, USDA loans are not just for homebuyers in completely rural areas. In fact, 97% of the land in the U.S. is eligible for a USDA loan. This means even if you're moving just outside of a city, there's a high chance you're moving to a USDA-designated area. USDA loans are zero-down-payment mortgages aimed at rural homebuyers. The U.S. Department of Agriculture mortgage program might be one of the government’s least-known mortgage assistance programs.
USDA loans are part of the USDA Rural Development Guaranteed Housing Loan Program, administered by the United States Department of Agriculture.
Income Limits and Eligibility
The income limits to qualify for a USDA home loan have risen and can vary by location, income, and household size. To find the new USDA loan income limit for your county, check the USDA Income Limit Map.
USDA Loan Requirements
USDA loan requirements are based on both the buyer and the property.
Location: The home must be in an eligible rural area, typically defined as having a population of less than 20,000.
Income: The buyer must meet USDA monthly income caps, which means you can't make more than 15% above the local median income. Additionally, the home must be your primary residence—no vacation homes or investment properties are allowed.
Financial Requirements:
Income Eligibility: Steady job and monthly income, proven by tax returns.
Credit Requirements: A credit score of at least 640, though this can vary by lender.
Debt Ratio: A monthly payment—including principal, interest, insurance, and taxes—that’s 29% or less of your monthly income, and a debt-to-income ratio of 41% or less in most cases.
Residency: U.S. citizenship or permanent residency is required.
If you're considering buying a home, a USDA loan could be a great option to explore, especially if you're looking to move to a rural or semi-rural area without making a down payment. For more information, visit the USDA Rural Development site or HUD.gov.