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Are You Eligible for a Rural Loan?

by The Urban Specialists 11/01/2020

Photo by Pete Linforth via Pixabay

Vacant land is a hot commodity – especially for builders. If you’re searching for a home, you may find one in an area that’s growing in population but still offers great lots. Interestingly enough, these areas that look like thriving cities could be zoned in an area deemed “rural.” If so, you may qualify for a rural home loan.

What’s a Rural Home Loan?

Rural home loans are issued by the U.S. Department of Agriculture (USDA) and have specific criteria and qualifications. These loans are designed to provide homeownership to rural and suburban Americans that may not qualify for conventional financing. Here are some advantages:

  • USDA guarantees all loans against default
  • No down payment
  • Lowest funding fee of all loans backed by the government
  • No private mortgage insurance requirement
  • Flexible credit guidelines

How Do I Qualify?

In order to qualify for this program, you must be a U.S. citizen or have permanent residency. Credit scores should be 640 at a minimum and proof of stable income is required. The lenders check payment history – you should have no late payments or collections, and the adjusted household income should be equal to or less than 115% of the area’s median income. The property must be the primary residence and located in a qualified rural area.

There are many places that qualify as rural that will surprise you. Gone are the days where there is nothing around and all you see is miles and miles of empty land. Obtaining a rural loan will allow homeowners to purchase in areas that provide land that’s worth the money.

The USDA Loan Process

The process has a few components involved. First, you must find a lender and prequalify. It’s best to find a lender specializing in this area to get the best benefit. The lender is going to focus on how much you want to borrow, your income and other assets and your monthly debts. In order to qualify, they will do a hard credit inquiry.

After the prequalification to determine how much you are eligible for, you go through the preapproval process which is more in-depth. The lender will require photo identification, tax returns, W-2’s, bank statements, and pay stubs. This is when they determine your debt-to-income ratio to see how much you can actually afford.

The next step is finding a USDA-approved home. This is where you work with a realtor to find properties that appeal to you. Once you find it, it’s time to sign a purchase agreement, go through processing and underwriting, and finally, the closing. Securing the loan is based on the broker, your financial situation and the property you have chosen.

Have you seen a home in a rural area that you like? Now you know the criteria involved with obtaining a USDA loan. Are you ready? The rest is up to you.

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The Urban Specialists

CITY RESOURCES The great thing about urban centers is just how much stuff you find around you. Your favorite restaurants, cultural activities and museums are within walking distance of your front door. It's convenient and adds to how much you get out of your place. For more info on New Haven, check out these links: Info New Haven Visit New Haven We are passionate about the environment. We are eager to help you to add value to your current home, save money on utilities, make your lives more energy efficient and eco-friendly, and generally live a "greener" lifestyle, all without sacrifice. For more info on green living in New Haven, visit these sites: CT DEEP Neighborhood Housing Services of New Haven USGBC's Green Home Guide We care about historic properties and their communities and wish to encourage preservation of our community's architectural and cultural history. For more info on New Haven preservation, check out these links: CT Trust for Historic Preservation New Haven Preservation Trust Historic Homes Downtown Areas Neighborhoods Green Homes Bethany Branford Guilford Hamden New Haven North Haven Orange West Haven Woodbridge Olivia C. Martson Olivia Martson is a long time resident of New Haven. She lives and works in downtown New Haven and is thoroughly familiar with the pros and cons of urban living. From 1992-1997, she served on the New Haven Board of Alderman as the elected representative for Ward 2, the downtown neighborhood immediately west of Yale University. Fore more : Biography - http://media.mlspropertyfinder.com/418613/preview.jpg