Probably the single biggest draw of the USDA loan is that it requires no down payment. USDA and VA loans are the only no down payment programs in the entire country. VA eligibility comes from serving time in the military and/or the reserves. The USDA Rural Development Loan Program doesn’t require any such requirements. It only requires that the home falls in a designated eligible area, and the household income doesn’t exceed the set income limit designated for that county. Because of these criteria, one may thing the loan is intended for only low income families, who live way out in the country. Although in many instances that is the case, the program actually is quite flexible. Many times, the loan is eligible in suburban areas and/or areas that aren’t even all that rural. Also, depending on the county or family size, the household income limit can be well over 6 figures.
With all the benefits and the flexibility of the program, you would think realtors and homebuyers alike would be all over the program. However, that is not typically the case. Many realtors are not well versed in the program or aren’t even aware that it exists at all. Also, because the loan does go through tougher appraisal standards, that turns people who want a cheap “fixer upper” away. The appraiser must be state licensed and on the USDA approved list. The loan must also go through USDA underwriting which can also slow down the process a bit. Regardless, the USDA loan is an excellent program that helps homebuyers with the biggest hurdle of getting a home – a down payment. J