USDA Loans Overview
What Is A USDA loan?
USDA loans are a special type of zero-down mortgage that is available to eligible homebuyers living in rural or suburban areas. They can be obtained through the USDA Loan Program, which has the backing of the United States Department of Agriculture (USDA).
USDA supports a range of loans that help low- and moderate-income individuals buy, renovate or repair a home in rural areas. They offer great benefits for eligible buyers, such as 100% financing without a down payment and lower mortgage rates.
There are three types of USDA home loans available: the single-family direct homeownership loan, the single-family guaranteed homeownership loan, and the rural repair and rehabilitation loan grant. This guide will help determine if you are eligible for these loans.
Although the terms and conditions of each loan are different, they all offer very low-interest rates (some as low as 1%) and require no cash down payment. You must have a good credit history to be eligible. Some properties may not be eligible for USDA loans. To find out if your property is eligible, visit the USDA website.
USDA Direct Homeownership Loan For Single-Family
This USDA loan is for low-income households to buy, renovate or repair homes in rural areas. For those with incomes above 60 percent, the loans can be extended for up to 33 years, for those below that for 38 years, and for those who purchase a manufactured home (mobile or other homemade in a factory) for a maximum of 30 years.
Your household must be below 80 percent of the area's median income; have adequate housing; be able to pay the mortgage, taxes, and insurance on the property (though subsidies may be available to help with this part). You also need to be unable to obtain credit from another lender. You must also buy a home that is reasonable in size, market value, and design for the area. Learn more on the Single-Family Direct Homeownership Loan program.
USDA Loan For Single Family Housing Guaranteed
The loan is available to moderate-income households who wish to purchase a modest home in rural areas. Your income must not exceed 115 percent of the area's median income. You must also be able to afford to pay the taxes, mortgage, and insurance. The interest rate for these loans varies depending on the lender. They have been available for 30 years. These loans can be issued by any state housing agency. You can find more information on eligibility and eligibility at our USDA Home Loans resource page.
USDA Loans And Grants For Rural Repair And Rehabilitation
These grants and loans are available to low-income individuals to help them repair or upgrade their homes to remove safety or health hazards or make them more sanitary. You must earn less than 50 percent of the local median income, and you cannot get credit elsewhere. To qualify for one of these grants, you must be at least 62 years old and unable to repay any of these loans. A $20,000 loan can be obtained with a 20-year term at 1 percent interest and a $7500 grant. You can also combine both of these loans for up to $275,000. Visit the USDA website to find out more on Single-Family Housing Repair Loans & Grants.
USDA Loans For Mutual Self-Help
This USDA loan is for low-income rural families who cannot afford to purchase a home or build one. The families will be responsible for most of the labor. Families must earn less than 80 percent of the area's median income and have no access to credit. You can get a loan for as long as 38 years, but it could be shorter depending on your income. Effective interest rates are as low as 1%. For more information, please visit the USDA page on Mutual Self-Help Housing Technical Assistance Grants.
