Although rural areas make up about 97 percent of America’s land mass, they house only 19.3 percent of the population, according to the U.S. Census Bureau. But while they may be scattered across the country, that 19.3 percent equals 60 million people who need a comfortable place to live.
The United States Department of Agriculture (USDA) is committed to improving the quality of living in the many rural areas of the country. Each year, the agency administers $38 billion in loans, loan guarantees, and grants through the USDA Rural Housing Loan program. In addition to direct loans, the program supports loans through rural banks that then help homebuyers and business owners purchase the property they need, strengthening the economy.
Types of Loans
The USDA provides four major types of housing assistance to rural areas:
- Housing for Individuals–The USDA provides lending assistance for buying, renovating, or repairing a single-family or multi-family rural home. Assistance is also available to elderly, disabled, or low-income residents of these areas.
- Housing Development Opportunities–These loans are provided to public and nonprofit developers to allow them to build and renovate multi-family housing in rural areas.
- Lender Opportunities–In order to strengthen rural communities, the USDA guarantees loans to allow private lenders to issue loans for the building of multi-family and single-family housing.
- Housing Regulations–The USDA also maintains updated handbooks with regulations for lenders.
Rural housing loans have income maximums to ensure the assistance goes to those who need it most. In order to qualify, you must have the income to repay the loan, while also not exceeding 115 percent of the median income of your area. The goal is to serve rural homebuyers who can’t qualify for conventional loans but want to move into home ownership. As a whole, the USDA’s support is geared toward elevating the economic standing of a community by supporting lenders, driving new housing development, and moving families into modestly-priced homes.
How to Qualify
As mentioned above, homeowners must meet income qualifications, with household earnings that ensure they can afford the monthly payments. As part of the application process, homebuyers must also agree that the purchased home will be their primary residence and they cannot have been previously suspended from federal programs. The property to be purchased must also meet regulations, including being located in a qualifying rural area.
Once you’ve identified that you qualify for the program, you’ll need to visit a local mortgage lender for the appropriate forms. If you are unsure which lenders participate in this program, you can use this contact list to find approved lenders in your area. Contacts at these locations can also help with any questions you have.
If you live in a rural area, the USDA Rural Housing Loan program can give you a boost in your drive toward home ownership. Before proceeding, make sure you aren’t eligible for a conventional loan. Your local mortgage lender can help you determine whether you qualify for either a conventional or rural housing loan and point to the best option for you.