USDA loans provide massive upsides. It goes without saying that a $0 down payment and kinder credit guidelines make USDA loans better than other loan kinds.
It's important to note, however, that not all homes are eligible for USDA financing.
USDA loans have specific eligibility requirements as their job (along with helping individuals seeking loans), is to boost rural communities nationwide.
For a property to be considered USDA Loan eligible, it must meet the basic eligibility requirements set forth by the USDA.
These requirements touch on; rural areas, occupancy types, and the physical conditions of the homes in question.
Here's the kicker: 97% of the country is in what the USDA considers a qualified rural area.
In this post, we are going to touch on the USDA Rural Property Requirements.
USDA Loan Property Eligibility Map
Important to note straight away is that property eligibility areas can change annually. These are due to factors based on population size along with other means. The map below is a helpful representation of USDA eligible areas.
The areas in darker tan shade are the ineligible regions. Remember, 97% of the USA remains in USDA eligibility areas!
Verifying Addresses for USDA Loans
If your dream home is located in an area that does not appear to meet the rural designation, a USDA-approved lender can verify the address through the USDA's online portal.
What is a "Rural" Area for USDA Loans?
Here is the USDA's rural definition: the home must be in an area that's located outside of a town or city and not associated with an urban area.
The USDA's guidelines on the definition of a qualified "rural area" includes:
1. A population that doesn't exceed 10,000. Period.
2. A population that doesn't exceed 20,000; AND is not located in a metropolitan statistical area (MSA); AND has a lack of mortgage credit for low- to moderate-income families.
3. Any area that was once classified as "rural" or a "rural area" and lost its designation due to the 1990, 2000 or 2010 Census may still be eligible if the area's population does not exceed 35,000.
How about the USDA Property Requirements?
The USDA wants to protect the borrower's interest and well-being as such, there are minimum requirements in place to do so.
Here are property types eligible for USDA loans apart from purchasing a pre-existing home:
-Manufactured or modular homes
-First, the home in question must serve as your primary residence.
-New construction
-Condos and townhouses
-Short sales and foreclosed homes (think wholesalers)
USDA loans cannot be used for investment properties, meaning farms, rental or vacation homes, and other income-producing properties aren't eligible.
To Round out Our Discussion of the Eligibility Requirements:
USDA income limits count toward all adult household members and can vary by location and household size.
The base income limits are:
1-4 member household: $82,700
5-8 member household: $109,150
If you're interested in participating in the USDA Loan process, stop by USDALoanInfo.com and speak to a qualified agent today!