What Is a USDA Home Loan?


Quick Answer

A USDA home loan is a loan funded by the United States Department of Agriculture in order to help low-income families purchase or repair a home in order to live in a safe, sanitary environment. The home must be located in a rural area.

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Full Answer

This program, known as the Section 502 Direct Loan Program, is in place to help low-income applicants obtain safe, decent and sanitary housing located in eligible rural areas. The amount the applicant qualifies for is determined by his adjusted family income. People wishing to apply for a loan must meet the required income limits and be willing to demonstrate the ability to repay the loan.

Applicants must also be without safe and decent housing, be unable to obtain a loan from another resource, agree to occupy the home as a primary residence, be legally able to incur a loan obligation, meet the citizenship requirements set out by the USDA and not be suspended from being able to participate in federal programs.

Additionally, the property being funded must be modest in size for the area in which it's located, not have a market value greater than the area loan limit, not have an in-ground swimming pool and not be designed for any activities that may produce an income.

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