Property Eligibility Requirements for USDA Loans
If you’re making plans to relocate to a rural community or live in one already and are looking to purchase a new home, make sure to consider USDA loan programs as you explore mortgage financing options.
Designed for buyers of properties in rural locations, USDA rural home loans, more specifically known as USDA Single-Family Housing Guaranteed Loans, can sometimes offer better mortgage terms for low- to moderate-income homebuyers. However, your new home will have to meet certain property eligibility requirements for USDA loans. Read on to learn more about how you might qualify.
What are USDA’s property eligibility requirements?
The USDA Economic Research Service defines “rural” based on a county’s population as well as its geographic and economic features. In order to have access to USDA home loan funds, your new home must be located in one of the following types of places:
- Open countryside (a home on acreage, for example)
- A rural town with a population of 2,500 or less
- A town with a population of up to 10,000 people if it is rural in character
- An urban area that is not classified as part of a larger metropolitan area (as in it’s not a suburb of a major city) with a population of 2,500 to 49,999 people
Properties in a larger town may still meet USDA property eligibility requirements if the locality has little to no mortgage loan access for low- to moderate-income families.
Why does USDA have property eligibility requirements?
While property eligibility requirements for USDA loans may seem restrictive at first glance, they’re actually more accessible than you may realize. In fact, 97% of land area in the United States is eligible for USDA loans.
The USDA Single-Family Housing Guaranteed Loan Program was designed to stimulate growth in less-populated, rural, and low-income areas, hence why USDA rural home loans often offer significantly more attractive terms. Those include no-down-payment options, sometimes lower interest rates, and easier credit score requirements than conventional loans.
How can I be sure my property is USDA-eligible?
To find out if your property meets USDA property eligibility requirements, simply enter the property’s address in the USDA’s online eligibility map. The map will immediately display your property as well as its eligibility.
If you’d like more help determining if a home you want to buy meets property eligibility requirements for a USDA loan, reach out to your OVM Financial loan officer for guidance. You can also learn more about state-by-state USDA loan guidelines, including USDA loans in Pennsylvania, by checking out the OVM Financial blog.