3 Things You Didn�t Know About USDA Loans

It might seem a bit odd that the United States Department of Agriculture, or USDA, has a mortgage program but it does. The USDA loan is designed to finance purchases that are located in a rural or semi-rural area and for the right buyers there is no better option. USDA loans aren�t as popular as they should be because many mortgage lenders ignore the program, and that�s a shame. Here are some things many don�t know about this program and can help narrow down the choices when selecting a financing option.

Zero Down

There is only one other mortgage program in today�s marketplace that does not require a down payment. The VA home loan doesn�t require a down payment but is reserved for veterans of the armed forces and other eligible individuals but the USDA loan doesn�t require you to be a member of anything. The USDA mortgage asks for nothing down. If you�re seeking to finance a property while coming to the settlement table with as little cash to close as possible this is a very good option.

Location, Location, Location

While the USDA program is one of two zero down options it is designed to finance properties located in a rural or semi-rural area. Who determines what is considered rural or semi-rural? The USDA does and places that information on its website. When buyers find a prospective property and want to see if it�s in an eligible zone, the property address is entered on USDA�s site. If it is in an approved area it will say so. It�s also important to note here that just because an area doesn�t appear to physically be located in an approved area due to population shifts over time an area may very well be USDA approved after all.

Income Limits

Along with the property being located in an approved zone the borrowers must also meet certain income limits. For all of the occupants of the home, the household income cannot exceed 115% of the median income for the area. There�s a bit of math to do here but again your loan officer can walk you through the process. 

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