An Alternative Way to Secure Home Loans

At first glance, it may sound strange that the U.S. Department of Agriculture has extended its scope of responsibility to include not only agricultural products but also home loans. However, the idea that the USDA is sponsoring a loan program is already old news. According to Federal laws, the mandate to provide loans can be found in Section 502 of the Rural Development Housing and Community Facilities Program. It is otherwise known as the USDA loan. In the past the USDA loan is known by other names such as the Farmers Home Administration. Other popular names attached to the said program are Farmer Mae and Rural Development loan.

Aside from the Veterans Affairs home loan there is no other loan program similar to what the USDA is offering. This particular loan program does not require any down payment. In addition, the purchasers can also roll their closing costs into their loan. As a result the USDA loan is one of the most attractive programs in the market today.

Just like the Federal Housing Administration loan, the applicant does not have to belong to a specific class of borrower. There is no need to be a veteran or a member of the National Guard. Even if the person is not a first time homebuyer the USDA loan is available to him or her. However, there are certain requirements such as the need to prove a certain income level and documents to show that the one taking a loan lives in an area covered by the loan program.

There are various ways to benefit from a USDA home loans program. The money needed can be acquired directly from the government through the Federal Land Bank. An alternative way to acquire the loan is through a guaranteed program where there is a lender that underwrites and funds the USDA loan based on specific guidelines.

In important feature of the program to remember is that the borrower is eligible, if his or her monthly gross household income does not exceed one hundred fifteen percent of the median income of a particular area covered by the said program. However, there are exceptions to the rule. It is best to visit the USDA website and look into the section that discusses eligibility issues. Just type the words USDA home loans or USDA loans into the search bar.

There are also geographic limitations based on the fact that the loans are designated for rural development. Thus, the first thing that comes to mind is that an applicant is eligible if he or she lives in far-flung areas. However, it must be pointed out that the term "rural" is defined as any unincorporated town. It is also important to remember that an applicant can live in an incorporated town as long as there are only less than 25,000 inhabitants in the said area. Nevertheless, there are pockets of suburban and even urban areas that qualify under the said program. Once again it is best to look into the USDA's website to learn more about eligibility issues.