Rural Housing Loan
What Is a Rural Housing Loan?
A rural housing loan, also known as a USDA loan, is backed by the U.S. Department of Agriculture and is designed to encourage homeownership in America’s more rural and remote locations. They’re ideal for low- and middle-income earners who may have difficulty obtaining other forms of financing.
Rural Housing Loan Qualifications
Rural housing loans can only be used for owner-occupied, primary residences, so they cannot be used on rental or commercial properties. You’ll also need to buy a home in an eligible location and meet certain debt-to-income and employment requirements.
Who Should Get a Rural Housing Loan?
USDA loans are designed for buyers with low to moderate income. They’re also ideal if you:
- Are willing to live outside a major metropolitan area
- Need low up-front costs at closing
- Are having a hard time securing funding through other means
Pros and Cons of Rural Housing Loans
- No down payment
- No prepayment penalties
- No limit on cash contributions
- 100 percent financing
- Limited to certain geographic areas
- Requires private mortgage insurance
- Some income limits may exist
- Limited to owner-occupied homes only