USDA Rural Development home loans are specifically designed to help low to moderate income households purchase homes in USDA eligible rural areas. USDA loans can be used to purchase an existing home, build a new home from scratch, or make repairs or renovations to an existing USDA eligible rural property. These funds can also be used to improve water and sewage systems on your rural property, or even used to relocate a home altogether. USDA home loans are available in all 50 states, as well as Puerto Rico and the Virgin Islands. General eligibility guidelines for the program are the same throughout every state, however each state decides which counties are eligible for the program based on income and population density.
USDA Eligible Areas
If you’re interested in a USDA home, the next step is to find out whether the home your looking to purchase is currently in a USDA eligible area. Several different factors determine eligible areas for USDA loans by state, particularly geographical and economic characteristics. For an area to be USDA eligible it must be located in a rural area. The USDA defines a rural area as any area that is rural in nature and is not part of or associated with an urban area, or any town, village or city and has less than 10,000 residents. Other less rural areas outside of major population centers with a serious lack of mortgage credit may qualify with populations between 10,000-20,000 residents. Many of these areas may not even be rural in nature, but have populations of less than 20,000 and are not associated with any major town or cities.
USDA Income Limits
Because USDA rural home loans are meant only for low to moderate income households, there are specific income limits in place in order qualify. To qualify for a USDA mortgage, your overall annual household income must not exceed 115% of the average median income for that particular area. Depending on where you’re choosing to purchase your home, income limits may be higher or lower depending on that particular area’s average median income.
For example, if you’re choosing to purchase a USDA eligible property in Ohio you can expect an income limit anywhere between $144,000 as it is in Adams county, or an income limit as high as $200,000 as it is in Lorain and Medina counties. For a complete list of USDA eligible counties, as well as their income limits you can visit this link or contact your nearest USDA loan representative.
Property Requirements
Once the potential buyer has found a USDA eligible property, the property must meet certain USDA home loan requirements. All properties must be modest in nature and meet all developed standards imposed by State and local governments. It also must meet minimum standards regarding water and wastewater systems, as well as Agency street and access requirements. And lastly, all USDA mortgage properties must have a professional home inspection done prior to getting approved in order to verify that the property is up to code.
