What Is a USDA Home Loan?

A rural home

The USDA (United States Department of Agriculture) established a home loan program in 1949 designed to help property owners secure financing on rural property. The program is run by the USDA Rural and Community Development.

Significance

Rural property is hard to purchase due to limited programs that will finance large tracts of land or property in non-suburban areas. It is also one of the last zero percent down payment loan programs left in the United States.

Function

A USDA home loan allows a borrower to purchase or refinance a rural property with little to no down payment. It is funded and run by the United States Department of Agriculture's loan program and is designed to encourage development in small towns or rural areas.

Purpose

You can use a USDA loan to purchase or refinance property or to renovate or repair a damaged home.

Considerations

While zero percent down payment sounds appealing to many borrowers, a borrower may find himself owing more than a property is worth if the value of the property drops.

Geography

All 50 states fund USDA loans, although not in every area of every state. Click the link in the Resources section of this article to locate a USDA office near you to find out if you can take advantage of a USDA loan in your area.

References

• USDA.gov: Rural and Community Development
• Rurdev.Usda.gov: Individual and Family Opportunities
• USDALoanApproval.com: USDA Home Loans

Resources

• Rurdev.USDA.gov: State Offices