USDA stands for the United States Department of Agriculture. It plays an important role in the development of housing across the United States in many different ways, including the guarantee of home loans. When talking about USDA homes, we are referring to a part of the USDA called Rural Development.
The USDA has many different financial programs that help to support services such as telephone, electric, public facilities, water and sewer systems, health clinics, housing and more. They do this by supporting loans to specific kinds of businesses using credit unions, banks and community managed lending pools. The organization has a portfolio of loans equal to $155 billion. They currently provide about $20 billion in loans, grants and loan guarantees during a typical fiscal year. By doing so, they assist rural communities, businesses and people in a great way.
In order to purchase a USDA home, a person must qualify. However, where the property is located also makes a difference in whether or not it qualifies for a USDA home loan. When you're talking about USDA homes, you are really referencing two different things. First, you can purchase a home using USDA home loan funding. This kind of financing can be used on a variety of different properties in different areas whether they are foreclosures or not.
On the other hand, you might be talking about USDA foreclosures. These government foreclosures are similar to VA homes or FHA foreclosures in that the government takes them back if the borrower defaults. Just like HUD foreclosures, these USDA foreclosure homes need to be sold off in order to allow the government to recoup their investment.
In order to buy one of these properties, you must first look for USDA approved homes. These are houses for sale that meet the guidelines for USDA home loan requirements. Many times, they are in the rural areas, as the name implies.
These kinds of loans used to be called "farmer's loans" because of the location of many of the houses. However, metropolitan areas have gotten a lot broader over the years making more homes in the suburbs available for USDA loans. In fact, some properties become eligible simply because of the county and zip code wherer the home is located. Of course, the person also has to go through the normal qualification procedures related to their credit score and income.
So what are the perks of looking at USDA government home loans rather than other kinds of financing?
Here is additional information about what the USDA offers when it comes to home loans:
There are several other options available for unique USDA loan programs that apply to more specific situations such as water and waste.
The great thing about USDA loans is that many people qualify and don't even know it. If a home is located in an approved USDA area, many people will qualify to purchase it. Of course, the person must have sufficient income and a credit history in order to prove that they can pay the monthly payments. The person must also be of legal age to own property in the United States. He or she cannot own another home at the same time.
The first step is to check to see where eligible properties are located in the USDA database. Then, the person must go through an income eligibility check through the USDA site. Just as with any other mortgage loan process, a person must show sufficient income and credit history in order to qualify. Only certain lenders are approved to handle USDA loans, so it's also important to make sure that you choose a specific lender who understands and is approved to handle the process.