Who Qualifies for USDA Rural Development Home Loans?


Quick Answer

Applicants for U.S. Department of Agriculture Rural Development home loans must meet income guidelines and use the home as their primary residence, states the USDA. The property must meet program requirements, and applicants must be U.S. citizens, qualified aliens or nationals. Applicants must demonstrate the legal capacity to incur the debt and the ability to repay it, and must be eligible for federal program participation.

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Full Answer

The USDA Rural Development home loan program supports lenders that provide loans to low- and moderate-income homebuyers, according to the USDA. The program gives qualified lenders a 90 percent guarantee on the amount of the loan to encourage home ownership in rural areas. The USDA website provides a tool to check the status of an address and verify that it's in an eligible area. The website also maintains a partial list of approved lenders and contact information for each state's guaranteed loan coordinator.

Participants use loans to purchase, build or improve homes, explains the USDA. Homeowners use funds to upgrade existing dwellings to accommodate disabled family members. Borrowers can use a portion of a loan to pay real estate taxes and insurance premiums. The program allows funds to be used to purchase appliances and upgrades, as well as energy-efficient features such as thermal windows, insulation and solar panels. Other legitimate uses include building site preparation and landscaping, and broadband installation.

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