USDA loans are a great option for people in rural areas, especially those with less income.
Figuring out if you’re eligible for a USDA (US Department of Agriculture) loan through the USDA’s official site is unfortunately somewhat difficult, so in this article we’re making it simple.
There are a two main types of USDA home loan for individuals, so we’ll take them one at a time:
Single family housing guaranteed loan program
When you hear about USDA loans, most of the time this is the program that people are talking about. It is designed to help low to middle income people in rural areas “to own adequate, modest, decent, safe and sanitary dwellings,” according to the USDA. These loans can be used to repair or relocate a dwelling as well as to purchase a home.
These loans are guaranteed by the USDA – which means that the lender can take greater risks than they otherwise would in offering generous loans to applicants, secure in the knowledge that the government will pay them back for up to 90% of the loan value, even if the applicant cannot.
- You must live in an eligible area. (This link will direct you to a map of eligible areas in the United States)
- You must meet income eligibility requirements for the loan. These are different depending on the county, but are outlined here. For Shasta County, income requirements for a single person range from 30,900 dollars per year to 78,200 dollars per year.
- You must agree to personally use/occupy the purchased dwelling as a primary residence.
- Applicants must be US citizens, non-citizen nationals, or Qualified Aliens.
- Applicants must have the“legal capacity to incur loan obligation.” What this means is simply that the applicant must be of legal age and sound mind, or have a court-appointed guardian who may act as an intermediary.
- You must not ever have been disbarred or suspended from a federal program.
- You must “demonstrate a willingness” to meet credit obligations by deadlines. If you can show that your loan payments (or similar payments) have been on time in the past you will meet this requirement. Best to bring any financial records that might be pertinent when speaking with your lender.
This covers the most common type of USDA loan, at least for home buyers in Shasta County. However, it is also important to cover the other main type of USDA loan for individuals.
Single family housing direct home loans
Unlike the guaranteed loan program, this is designed for low and very-low income individuals only. It is somewhat easier to qualify for, though there are restrictions on the type of property that may be purchased with a loan of this type.
For instance, properties procured through single family housing direct home loans must not:
- Be greater than 2,000 square feet in area
- Have a greater market value than the applicable loan limit
- Not be designed for “income producing activities.” If you intend to use your home as an office or a storefront, this loan may not work for you.
On the other hand, there are no income requirements for these loans, as they are designed specifically to help the poor. You must only be without non-hazardous housing, and be unable to procure a loan from another source. In addition, borrowers must have legal capacity, citizenship, and have a clean record with regard to disbarments and suspensions from federal programs.
Overall, this is a highly generous loan for rural areas, and is a godsend for lower-income individuals.
Many areas of Shasta County are eligible for USDA loans! If you’re interested, you can read more about those loans here. Or, call Megastar Redding at 530-999-9000 with any questions.