USDA Home Loans – A Great Way to Save Money


The USDA Home Loan Isn’t Just for Farmers Anymore

Securing a home loan is no easy task in this economy.  Banks are requiring higher down payments and higher credit scores making it more difficult than ever to obtain a home, if not impossible for some.  However, the government offers several unique programs to help those with lower incomes achieve homeownership, and one of those programs is the USDA Home Loan Program.

What is the USDA Home Loan Program?

The USDA Home Loan program was originally designed to encourage growth and development in rural areas by offering low interest financing options to families.  Today, however, those interested in rural living aren’t the only ones eligible for financing anymore.  Nearly 50 million people were eligible for USDA home loans in the last year alone as the covered area has expanded to many suburban and even urban areas, but only 150,000 took advantage of the program.

What are the Benefits of the Program?

A USDA home loan is 100 percent guaranteed by the United States Department of Agriculture.  Because of this guarantee, lenders are able to grant borrowers, even those with lower incomes and credit scores, excellent benefits including:

  • No mortgage insurance
  • No or limited down payment required
  • Competitive interest rates
  • Flexible mortgage terms

Who is Eligible?

Out of all of the government funded programs, the USDA loan requirements are a bit more lax than the others.  In order to qualify for a loan, interested borrowers must simply:

  • Purchase a USDA eligible home
  • Be able to afford the monthly mortgage payments
  • Have an income within the median average

Eligible properties are those located in rural areas, defined by the USDA as open country that is not part of or associated with an urban area.  It is also defined as any area that is not part of or associated with an urban area that has a population of less than 10,000, or is not contained within a Metropolitan Statistical Area and has a significant lack of mortgage credit with a population between 10,000 and 20,000.  For an accurate list of eligible areas, see the USDA’s interactive eligibility map.  Click the appropriate type of property eligibility on the upper left to get started.

Although the USDA home loan does have more lenient guidelines than conventional lending programs, most approved lenders will require a mid-range credit score of at least 620 to obtain financing.  However, because the USDA does offer more specialized financing for lower income households, even those questioning their eligibility are encouraged to apply.

Post Provided By Kevin Pearia, Content Director for

Photo thanks to Kevin Dooley under creative commons license from Flickr