100% Financing For Rural and Suburban Homes
The USDA home loan is a widely available mortgage type backed by the U.S. Department of Agriculture (USDA). Its purpose: to promote homeownership and economic development in non-metro areas. How does it accomplish this task? By offering 100% financing to eligible home buyers in less-dense areas of the country. Homeownership leads to stable communities, which in turn spurs economic development in these geographical pockets. Mortgages that eliminate the main barrier to entry — a downpayment — are arguably the most important catalyst in this virtuous cycle.
Yet most home buyers don’t know much about the USDA loan, if they’ve heard of it at all. With USDA mortgage rates in the 3s, and home prices still within affordable ranges, it’s time for buyers to look closely at the USDA home loan program.
USDA Loan : Not Just A Small-Town Mortgage
The USDA loan probably has more names than any other loan type. But all the following titles point to the same mortgage program.
Rural Development (RD) Loan
USDA Home Loan
Section 502 Loan
Single-Family Housing Guaranteed Loan Program
Don’t take the names at face value. This is not an obscure loan type only available in extra-remote areas, and only available directly from the government. Quite the opposite. A full 97% of U.S. land mass is eligible for USDA financing, much of which is just outside major metro areas. Suburban neighborhoods across the country are dotted with USDA homeowners who discovered that their desired community was eligible. Home loan applicants are also surprised that these loans are available from a variety of lenders across the country. It’s often served alongside FHA home loans and VA loans as part of a lender’s list of government-backed loan options. It always pays to check with your lender about a few things: 1) whether your desired home lies within USDA geographic eligible zones, and 2) if you qualify for the program.