Direct Loans from the USDA Rural Loan Program

USDA Loan Family

The USDA offers programs for people and families who are looking to purchase homes in rural areas of the country. Many times people who live in rural areas have economic disadvantages because they are not located close to areas of business that supply good paying employment opportunities. The USDA offers mortgage loans so that those people are not forced to move and can afford housing in the rural areas they want to live in.

USDA Loan Facts

  • The loan money will either come directly from the government or through a third party lender who has gone through the USDA approval process to originate loans that are backed by the government.
  • You can get a loan to purchase a pre-existing home. The USDA offers mortgage loans for homes that are already for sale.
  • You can get a loan to purchase land and construct your own home. For this option you will need to have the building contract and land purchase contract so that the USDA will know the full amount of the loan you are applying for. There may be some restrictions on the builder as far as a time frame for finishing the construction.
  • You can get a loan to purchase a pre-existing home. The USDA offers mortgage loans for homes that are already for sale.
  • You can get 100% financing to purchase a home. With the USDA Rural Home Loan Program you do not have to have any money down to purchase a home. The government offers the zero money down option in order to help low income rural families purchase homes. In many cases these families may be making just enough money to pay rent, and could pay the same amount on a mortgage to own their own home, but don't have any extra money left over to save for a down payment. That is why the USDA does not require any down payment on their direct loans for rural housing.
  • Mortgage payments for the USDA loans are based on household income. They consider how much you earn and allow around 26% of that amount to be used towards a mortgage payment. This determines how much of a loan you can afford.
  • The USDA Rural Home Loan Program is designed specifically for very low and low income families.
  • Loan terms are for up to 33 years or 38 years if your income is so low that you could not afford the monthly payments unless the terms are stretched out for longer.
  • If you have a manufactured home the USDA offers loans to help you move your home and purchase a piece of rural land. The maximum loan term for a manufactured home is 30 years.
  • The interest rate is based on the rate the government is paying for the money borrowed. However, there is also a program that offers payment assistance in the form of subsidies.

More Information

The USDA offers the Rural Home Loan Program in order to help families in rural areas with low and very low incomes purchase affordable housing for their family's needs. Check out the USDA Rural Loans site for more information on this program.