Location-Based Eligibility for USDA Loans
There are few zero-down loans on the market currently.
Two main programs do not need a down payment: the VA loan and the USDA mortgage.
The VA loan needs qualifying military service, whereas the property’s location determines the USDA loan eligibility.
These loans were designed to stimulate economic growth in rural regions of the United States (thus the “other” term, Rural Development, or RD loan).
As a result, purchasers can use the loan within the geographical restrictions outlined on the USDA’s eligibility maps.
Then, how does one locate an eligible property? It is more straightforward than you believe.
Geographic Qualifications for a USDA Home Loan
The USDA provides online, searchable, interactive eligibility maps. Tan-shaded regions are ineligible. Outside of these locations, USDA loans are available with no down payment.
You may search for an address or navigate through neighborhoods and cities.
This sample of Dallas-Fort Worth demonstrates the enormous USDA-eligible regions outside of highly populated areas.
97% of the U.S. land mass is eligible for USDA assistance, representing 109 million people. In addition, some truly suburban areas qualify since the maps have remained relatively the same since the census of 2000.
The maps are scheduled to be reviewed again in 2017; therefore, it would be prudent to get a USDA loan before these extremely liberal geographical borders are altered.
“There’s No Way That My Location Is Eligible”
This is what most suburban homebuyers believe before searching eligibility maps.
Frequently, they find USDA-eligible properties within thirty minutes of their office.
As previously noted, map limits are still determined by population estimates from over two decades ago. Technically, to be eligible for USDA funding, a city or municipality must:
- Have less than 20,000 residents.
- Be rural in personality.
- Have insufficient available credit.
However, until the results of the 2020 census are obtained, a region is still considered rural if its population is below 35,000.
For the time being, cities with substantial populations remain eligible for the Rural Housing loan.
Determine Your USDA Eligibility
USDA loans are quite valuable in the current market for purchasing a house.
The underwriting conditions are lax as they are designed for those with limited incomes. Check your qualifications and purchase a property with no down payment.