A Brief Overview of USDA Rural Mortgage Loans

Guest Post by Rob Stretch Beginning farmers and families looking to move to rural areas can apply for a USDA mortgage loan. Farmers can run into a lot of hitches during the startup phase. USDA loans can ease the financial worry of funding the proper land for a new farm and home. What are USDA loans? USDA mortgages are intended to boost the rural populace and help low to middle income people obtain a home loan. The U.S. Department of Agriculture backs the loan, resulting in good rates and other benefits. Rural areas or outer limits of metropolitan cities may qualify for the USDA mortgage.


USDA loans do not require a down payment.  There are only a few programs left that make this exception. Conventional programs do not.  In addition, closing costs can be rolled over into the monthly mortgage payments, which reduces the upfront costs of buying a home or land.

Because of the current condition of the real estate market, rates are low, and so are housing prices.  Good credit can make those rates even better.  However, USDA mortgage programs try to be flexible with credit requirements.  As long as a potential farmer can demonstrate the ability to make payments, with a decent credit history and debt to income ratio, he or she can be approved for a USDA loan.


The Farm Service Agency or FSA is a great resource. The FSA can help farmers get approved for the loan. They can also counsel farmers on how to build or improve their credit before applying for the loan.


Local USDA offices are the ones that make final decisions on eligibility. They look at credit history. In addition, they will also want to see that the applicant’s potential monthly payment will not go over his or her income. An applicant can visit USDA’s website to see if he or she meets household income limits and is purchasing a house in the qualified rural areas.


Any qualified lender can help a farmer to start a loan request.  It’s up to the potential buyer to be sure he or she has exhausted all options and thought carefully about their next big move.  The FSA or a lending counselor can help with that process.

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