USDA Loan Program

Posted by Terrence Murphy Sr. on Tuesday, April 30th, 2013 at 12:13pm

The United States Department of Agriculture, the USDA, has a home loan program that might be helpful to you. In order for individuals to receive the loan, the household income must be at a certain level to be eligible. Also the home that you wish to purchase must be in an eligible rural area that is defined by the USDA.

            The 502 loan is in place so that low income families have the opportunity to buy a home in a rural area. The funds that are received can be used to repair, build, relocate, renovate, purchase, and prepare a home site like adding sewage and water facilities.

            There are some eligibility requirements for the loans. Applicants must be low or very low income. Very low income is defined as being below 50% of the area median income (AMI). Families must also be without sufficient housing currently but are able to afford the mortgage payments including taxes and insurance.  These account for about 24% of the family’s income. There is the option of payment subsidy to increase the ability of individuals to afford the payments.  Families must have a reasonable credit history but have been unable to receive loans from anywhere else.

            Loans are for 33 years unless their AMI level is below 60%, in which then they can have an extension to 38 years.  The interest rate is modified by payment assistance subsidy.

            The home being purchased or renovated must meet modesty requirements. It must be modest in cost, size, and design.  Modest means that it must be modest for the area it is in and does not have market value in excess of the applicable area home limit. Homes must also meet national building, safety, and thermal codes.

            There are calculators on the USDA’s website to determine if you are eligible for a loan. There is also a calculator to see if the area you are interested is eligible. 

Here is the website:

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