USDA Mortgage Loan Program
To the disbelief of some consumers, the U.S. Department of Agriculture (USDA) does offer home mortgage loan programs to qualified borrowers, such as the USDA Mortgage Program. Typically, borrowers think of USDA as a premier lender for farmers, growers, and other commercial food operations, but never single-family housing.Check out the USDA grants and USDA assistance programs.
In actuality, the USDA offers several flexible mortgage loan programs that borrowers can take advantage of to refinance or purchase a new home.
You may be able to use a USDA mortgage program in areas that you may not think is possible. There might be an opportunity to use this program while still being within a reasonable distance to a big city, please see the USDA map for reference.3 In fact, most of the country is located in areas that qualify for a USDA loan, a qualified rural area.
USDA rural housing service insures a portion of the mortgage in the event of borrower default. The insurance is similar to that of FHA and VA mortgage loan programs. This lowers risk to lenders which can then offer more favorable repayment terms to borrowers.
Some benefits include lower down payment requirements and more liberal credit standards for borrowers in targeted rural areas. However, they must meet all other program eligibility requirements.
The purpose of USDA mortgage loan programs is to help foster economic activity and sustainability within rural communities through affordable housing. New Century Mortgage is proud to offer USDA mortgage loan program options as part of its suite of home financing solutions.
We will discuss a brief history of the U.S. Department of Agriculture rural housing service. Also, we will review some of the specifics and benefits in going with a USDA mortgage loan program.
USDA Mortgage Loan Program: A Brief History
Compared to other government agencies, the USDA has been around for some time, since the late 1800’s. However, the USDA rural housing service only celebrated its 25th anniversary back in 2016, making that leg fairly new when it was established in 1991.1
Donalsonville, GA was actually the first community to offer and utilize rural housing guarantee .1 This is where USDA rural housing service gained traction and expanded access to mortgage financing in rural areas nationwide. The headquarters for USDA is still in Donalsonville, GA to this day.
Since its inception, roughly 1.5 million residents purchased homes using USDA mortgage loan programs.1 Strikingly, 1.1 million of those purchases occurred between 2009 and the present. In addition, 134,000 buyers leveraged rural housing guarantees to make purchases in 2015 alone.1
In addition to mortgage financing, the USDA provides other assistance and grants to rural homeowners to make safety and soundness improvements to existing rural dwellings. Some of these programs even cover modifications to make properties more accommodating for residents with disabilities.1
USDA Mortgage Loan Program
While other government programs like FHA mortgage loan programs are less niche and geared toward a broader borrower base, the USDA’s home loan programs are targeted for low-to-moderate income borrowers living in rural communities.
USDA loans are eligible for no money down, in addition to easier credit conditions than most other loans.
USDA Mortgage Loan Program – Single Family Housing Guaranteed Loan Program (Section 502)
The Single-Family Housing Guaranteed Loan Program, also referred to as Section 502 Guaranteed Loan Program, can be used by borrowers who meet certain income-eligibility requirements to purchase a new primary residence in eligible rural areas2. The program can also be used to rehab or build a dwelling in an eligible rural area as well2. https://www.rd.usda.gov/programs-services/all-programs/single-family-housing-programs
One of the best parts about the program is that it is flexible. Some borrowers may be able to put little to no money down, but the property must meet all site criteria.2 If you are curious to see if a property may qualify for USDA financing, check out the site’s eligibility as well as local income limits using the USDA’s site look-up tool.
Want to learn more about USDA’s Single-Family Housing Guaranteed Loan Program? New Century Mortgage can answer all your USDA related questions.