USDA home loans are designed to help low to moderate-income families purchase or improve homes in rural areas of the United States. By offering low-interest rates and the possibility of buying without a down payment, USDA home loans are able to help lower income families become homeowners and stimulate growth and prosperity in rural areas. There are three types of USDA home loans and each one has specific eligibility requirements.

USDA Direct Loans

These USDA home loans are designed to help low and very low-income families purchase homes by providing payment assistance. In order to qualify, applicants and the property to be purchased must meet certain requirements.

Criteria for Applicants

  • Lack decent, sanitary, and safe housing
  • Lack the ability to obtain a home loan through normal processes
  • Use the property as their primary residence
  • Are legally able to enter into a loan agreement
  • Meet requirements for citizenship or be eligible non-citizens
  • Are eligible to participate in federal programs

Criteria for Properties

  • Are not designed to generate income
  • Do not have in-ground swimming pools
  • Comprise 1800 square feet or less
  • Market value is less than or equal to the area loan limit

USDA Guaranteed Loans

These USDA home loans are designed to help low to moderate-income families. Funds from a guaranteed USDA home loan may be used to purchase, relocate, rehabilitate, improve, or build a dwelling in an approved rural area. This USDA program guarantees 90% of the loan, which reduces the risk for the lenders.

Criteria for Applicants

  • Income may not exceed the adjusted income limits for the area
  • Use the property as their primary residence
  • Are legally able to enter into a loan agreement
  • Are a U.S. Citizen, Qualified Alien, or U.S. non-citizen national
  • Are eligible to participate in federal programs
  • Show willingness to fulfill credit obligations
  • Purchase an eligible property

Criteria for Properties

  • Must be located within an eligible rural area

USDA Repair Loans and Grants

Repair loans and grants differ from other USDA home loans in that they may not be used to purchase a new residence. Instead, this program is designed to provide loans to very-low-income homeowners, to modernize, improve, or repair their homes. Through this program, very-low-income elderly homeowners may be eligible for grants to remove health or safety hazards from their homes.

Criteria for Applicants

  • Own and occupy the home
  • Are unable to get affordable credit through other means
  • Family income must not exceed 50% of the median income for the area
  • Grant applicants must be at least 62 years of age and unable to repay a repair loan

Criteria for Properties

  • Must be located within an eligible rural area

If you believe you may qualify for a USDA home loan, we can help. At Starboard Financial, our highly qualified mortgage professionals can answer any questions you may have about USDA home loans or any other mortgage lending concerns. Contact us today to find out how we can help you.