USDA Rural Home Loan Program

Do you want to buy a home in a suburb or rural area? Consider the USDA loan program, where lower income individuals can buy a home and finance 100%! 100% financing has become increasingly rare in this lending environment, so it should be considered if you can qualify and you have little money for a down payment or you want to keep your savings for other uses. And don’t assume that you have to live in the sticks for one of these loans. Your local suburb may qualify.

There are 2 types of USDA loans – Direct and Guaranteed. USDA Direct loans are loans given directly by the federal government. Guaranteed USDA Guaranteed loans are guaranteed against default by the federal government. Guaranteed loans have higher income allowances

Income requirements calculated as a comparison to income for the whole area, so if you are looking at homes that are low-end for the area, go to the USDA website to see if you can qualify based on your income standards: .

Here are some additional requirements for a USDA loan:

  • Your debt-to-income ratio must be less than 41%. In other words, including your loan payment, your total debt must be less than 41% of your gross income.
  • Buyers must live in the home as a residence and cannot use the home for income producing activities.
  • Homes must be modest in size and design as compared to others in the area. For example, a home with a pool may cause the home not to be available for a full 100% USDA loan.