The United States Department of Agriculture (USDA), established the USDA Home Loan Program in 1991 to provide affordable housing opportunities.
Incredibly, this wonderful home loan program is available to Americans living in roughly 97% of the geographic United States landmass.
Sometimes referred to as the USDA Guaranteed Rural Housing Loan, the program offers individuals and families a zero-down payment home loan with great interest rates and terms.
The United States government has a vested interest in the affordability and stability of housing opportunities. The USDA Home Loan Program is one of the most significant efforts by the government to accomplish this objective.
By offering this unique ZERO down payment home loan, a large percentage of Americans have access to homeownership without the requirement of tens of thousands upfront.
Surprisingly, USDA Home Loan interest rates are among the lowest across all mortgage types.
In large part, this is because the government guarantees 90% of the value of the USDA mortgage for the lender, reducing significant lender risk. Because the risk is so low under the USDA Home Loan Program, lenders can offer competitive fixed interest rates to consumers.
The USDA Home Loan Program was created to make homeownership accessible, not unobtainable. Like all mortgage programs, there are credit qualifications, but the USDA Home Loan Program qualification criteria is less rigorous than conventional mortgages.
Of course every credit history is different, but you don’t need perfect credit to qualify for the USDA Home Loan Program and become a homeowner.
With closing costs, a difference between loan programs is the options for addressing them. As part of the USDA Home Loan Program's objective to provide affordable housing opportunities, the government sets closing cost thresholds and provides ways for homeowners to address them.
In fact, it is common for USDA homebuyers to have no out of pocket expenses at all. Options include family gifts, seller concessions, and financing costs when appraised value supports.