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Have you heard that USDA home loans are only eligible for rural areas? While that’s technically true, the USDA’s definition of rural is larger than you might think. I'm here to cover what land qualifies, eligibility requirements and highlight the benefits of a USDA mortgage.
What is a USDA Loan?
Known as the USDA Rural Development Guaranteed Housing Loan Program, a USDA loan is backed by the government and guaranteed by the U.S. Department of Agriculture. You can only benefit from a USDA loan if your property falls within the eligibility area (link opens in a new tab).
Along with the land requirement, you must also have a payment that’s 29% or less than your monthly income, dependable income for a minimum of 24 months and a good credit history.
USDA Benefits
There are numerous advantages of securing a USDA mortgage, such as the USDA guaranteeing all loans against default which allows lenders to take more risks for home buyers. Other benefits include:
- No down payment
- 100% financing
- Low interest rates
- Low private mortgage insurance
A USDA loan is a 30-year fixed-rate option at PrimeLending. It’s a popular option among first-time home buyers and for those who are buying on a budget.
Want more insight into a USDA loan? Watch this video for more details.