How to Apply for a USDA Home Loan

USDA loans are helping rural Americans with housing.

Applying for a USDA home loan requires submitting your application through an approved lender. The only loan that allows for 100 percent financing and no down payment is the USDA home loan, therefore this is an affordable option in rural areas across the country. The USDA home loan is unique, as it offers fixed rates and no asset checks. Farmers are not the only rural citizens that benefit from this loan. If you live in a community of less than 20,000 people outside of city limits you may be qualified to apply.

Things You'll Need

• Proof of U.S. citizenship

Instructions

1. 

   Birth certificates and U.S. passports are acceptable forms of U.S. citizenship identification.

   Pass the eligibility standards. In order to apply for a USDA home loan, you must be a U.S. citizen, qualified alien, or legally admitted to the U.S. for permanent residence. You must be able to afford the monthly mortgage payments which includes taxes and insurance, and have a satisfactory credit history. According to the Rural Development Branch of the USDA, "Applicants for loans may have an income of up to 115% of the median income for the area." An approved lender can answer any questions you may have about the income requirements. If you currently have adequate housing, you will not qualify for this type of loan.

2. 

   Housing agencies handle the mortgage loan process.

   Secure an approved lender. Through the Rural Development section of the USDA website, you can browse for state housing agencies that handle USDA loans. Guidelines vary between each lender. Lenders include HUD (Department of Housing and Urban Development), U.S. Veteran's Administration, Fannie Mae, Freddie Mac and any FCS (Farm Credit System) institution.

3. 

   The home you choose must meet the qualification standards of the USDA.

   Review the housing standards. Loans are only given for homes that are modest in size, design and cost. If you have a home already financed through a USDA loan but cannot make payments, the USDA Streamline Refinance Program may be able to help.

4. 

   As a new homeowner, have your home inspected for any issues that require attention.

   Buy your home. Once your USDA loan is approved, sign all documents to make it official.

Tips & Warnings

• Check with a mortgage professional for any questions about USDA home loans.

References

• Rural Development Branch of USDA: Home Loans
• USDA Loan Programs: Information on Loans

Resources

• Rural Development Branch of USDA: Instructions for Applying for Home Loans