USDA loan: An option for rural home buyers

by Tracey Boyd

The United States Department of Agriculture Rural Development agency was established to help improve the economy and quality of life in rural America. One of the ways it is doing that is through the Single Family Housing Direct Home Loan Program.

These USDA loans are available to assist very low- and low-income households purchase a home in rural areas, such as in Barry County, Missouri.

“No down payment is usually required,” Madeline Watson, area technician with the USDA, said in “USDA offers home loans with no down payment,” by Julia Kilmer on

“The maximum loan amount is dependent on the applicant’s repayment ability based on income and monthly debt obligations, but cannot exceed $216,840,” Watson continued. “With interest rates currently at 3%, the principal and interest payment would be only $598.50 on a $150,000 home, and some households might even qualify for payment assistance, reducing their monthly payment even further.”

The property must be located on a modest site in a rural area, typically in towns with a population of 35,000 or less, and the living area of the home typically may not exceed 2,000 square feet, according to the article. A USDA Rural Development employee will inspect the home to make sure it qualifies for the program, but the applicant is required to obtain an inspection from a qualified home inspector, the article reported.

“If the seller is willing, they can make any required repairs, or, if not, we will order an appraisal as repaired, giving the appraiser the list of repairs that will be completed,” Watson said in the article.

“The buyer will obtain bids for the repairs, which can be completed after the sale closes, so long as the house appraises at a sufficient value to loan the purchase price plus the amount needed for the repairs,” she said.

To qualify for a Single Family Housing Direct Home Loan, an applicant cannot already own a home and must be able to repay the loan, according to an article by Gabe Franklin on Furthermore, documentation from the USDA limits ratios to 29% principal, interest, tax, and insurance; or 41% total debt, and first-time buyers must take a home buyer education class before closing, the article reported.

In addition, Franklin’s article, “USDA aims to increase home ownership through loan program,” reported the USDA also offers home repair loans and grants to fix leaky roofs or bad heating systems, for problems with the house’s structure, for the installation of handicap access, and for other approved home improvement projects.