As home prices continue to rise—even in rural areas—the dream of owning a home becomes increasingly challenging for first-time buyers. When mortgage rates are also rising, that dream can feel even more distant than ever. But that doesn’t necessarily mean the dream is out of reach.
With the right guidance, you'll discover that there are many pathways to affordable homeownership hidden in plain sight. And if you’re looking to buy a home outside of major urban centers, one of the routes to take are home loans from the United States Department of Agriculture, otherwise known as USDA loans.
What Are USDA Loans?
While homes located in rural areas have traditionally been less expensive than homes in urban and suburban areas, the housing landscape has shifted significantly since the COVID pandemic. As more Americans took advantage of remote work and moved outside of big cities, rural home prices have surged, and many rural communities are facing very limited inventory.
Another formidable barrier standing between first-time buyers and homeownership is the dreaded down payment. Even the seemingly modest 3% down payment required of conforming mortgages translates into tens of thousands of dollars. This can be a particularly difficult obstacle for borrowers who have little savings and lack family members who are able to offer financial assistance.
Yet there are options and solutions tailored to overcome these hurdles. One option is a USDA loan, which provides 100% financing to qualified borrowers in rural communities. Since 1991, USDA loans have been essential in helping rural Americans realize their homeownership dreams.
What sets USDA loans apart is the inclusive definition of “moderate income,” which allows borrowers to earn up to 115% of their area's median income and still be eligible for 100% financing. This ensures that even those whose wages haven't kept up with the rise in housing prices have a shot at homeownership.
Where They Can Be Used
To this day, many people mistakenly believe USDA loans are only for purchasing farmland. The reality is that they can be used for most single family homes located anywhere outside large urban and suburban markets.
Generally, USDA loans are available in cities with 35,000 residents or fewer. But that accounts for an enormous number of housing markets. In fact, nearly 97% of U.S. land qualifies under the program. The USDA also provides an interactive map to see if the home you’re looking to buy qualifies.
USDA loans do have other requirements. For example, the home being purchased must be structurally sound and meet specific safety standards. It must be used as a primary residence, and certain properties—such as homes with an in-ground swimming pool—aren’t allowed.
For borrowers who qualify, however, USDA loans are not just a financial tool but a means of empowering families through homeownership, even if they don’t have much savings.
Where To Start
If you live in a rural area—or are thinking about moving to one—and rising home prices are making you feel deflated about your chances of buying a home, a USDA loan might just be the answer.
Thankfully, CBC Mortgage Agency has recently received approval to offer the USDA’s Section 502 Guaranteed Loan Program. We also partner with a vast network of correspondent lenders across the U.S. who can help determine if you and the home you want to purchase can qualify.
At CBC Mortgage Agency, we’re not just about providing solutions that make homeownership more affordable. We know buying a home is a significant life decision, and that every borrower has unique hurdles to overcome.
That’s why we provide tailored guidance as well as homeownership counseling to ensure your homebuying journey goes smoothly and you receive personalized assistance every step of the way. We can also match you with a USDA lender who understands your local market and is committed to making your homebuying dream come true.
Ready to learn more about USDA loans? Reach out to us today at 866-568-3507or drop us a note to info@chenoafund.org.
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