USDA Loans: Are You Eligible?

If you are unfamiliar with USDA loans, you might be wondering what the US Department of Agriculture has to do with home financing. This program was designed by the USDA to provide an accessible and beneficial loan program for residents of rural and suburban areas. To help you explore your home financing options, we've broken down the USDA loan benefits, requirements, and more.

What are USDA loans? 

USDA loans are mortgages supported by the U.S. Department of Agriculture under the Rural Development Guaranteed Housing Loan program. USDA loans, also known as rural development loans, are affordable loan options for residents of eligible rural and suburban communities, with household incomes that fall within the USDA loan program’s limits.

In 1949, the United States Congress passed the American Housing Act, which intended to support the post-World War II housing market. This legislation allowed millions of new homes to be built across the country while paving the way for renters to become homeowners. New mortgage loan programs were developed to support the anticipated wave of home purchasing, including the USDA home loan program. 70 years later, in the fiscal year 2019, mortgage lenders issued almost 100,000 USDA home loans. 

Benefits of USDA Loans

The goal of the USDA home loan program is to support people with low or medium incomes to become homeowners and support the development of rural communities. One of the biggest selling points of the USDA loan program is the $0 down payment option. In addition, recipients of this loan also have access to reduced mortgage insurance costs and below-market mortgage rates.

If you already own a home, you can refinance your home with a USDA loan. Additionally, even if you already have a USDA loan, you can refinance under a new USDA loan. 

Do I qualify for a USDA loan?

Since the USDA loan program has the specific goal of supporting families in rural communities, there are strict eligibility requirements that must be met in order to qualify.

• Geography: USDA loans support home purchases in certain, approved rural and suburban areas, which typically includes a population of 20,000 people or less. If you are not sure whether or not your location qualifies for the loan program, contact your local mortgage brokerage firm for more information.  
• Income: The household income must be under 115% of the median household income for the area the property is located. For example, if the median household income in your area is $80,000, then your household income would have to be $92,000 or under, in order to qualify for a USDA loan.
• Residence: The home for which USDA loans are acquired must be used as the primary residence for the family. So no USDA loans for summer vacation homes or second residences.
• FICO Score: In order to qualify for a USDA loan, you typically need at least a 640 credit score. Keep your credit score high by making credit card payments on time and consolidating multiple credit cards into a single card with a lower interest rate. Also, keep a low balance to help improve your debt utilization ratio and credit score.

Get Your Home with a USDA Loan Today

CPF Mortgage is a family-owned and operated independent mortgage company and broker that provides expert home-financing support and devoted customer service. Our fast and streamlined process is backed up by hundreds of five-star reviews from happy homeowners.

To learn more about which loan option works best for you, please feel free to reach out to us or call 727-263-3146.

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