USDA Mortgages: What Home Buyers Ask Us In Chat

Why is the USDA loan also called a “rural loan”?

USDA loans are also known as “rural loans” because the U.S. Department of Agriculture backs the program, and the program is meant to promote homeownership in areas that are lightly populated.

“Lightly populated” includes rural neighborhoods, and in many regions, it describes the suburbs, too. 97% of United States land is within USDA areas of mortgage eligibility.

I have a working farm. Can I use the USDA loan?

No, USDA loans are not available to households with a working farm.

I am buying a new manufactured home. Can I use a USDA mortgage?

Yes, USDA loans can be used to purchase new manufactured homes.

I am buying a modular home. Can I use a USDA mortgage?

Yes, USDA loans can be used to purchase modular homes.

I am buying a condo. Can I use a USDA mortgage?

Yes, USDA loans can be used to purchase condominiums.

What kind of credit rating do I need to use the USDA loan?

USDA mortgage guidelines state that borrowers should have a credit score of at least 640. However, the program allows exceptions for home buyers whose credit scores are below 640.

If I want to make a downpayment, can I still use the USDA mortgage?

Yes, you can make a downpayment when you use the USDA mortgage program. There is no requirement to finance 100% of your purchase.

What’s the USDA maximum loan size?

Unlike FHA and other government-backed mortgage, there is no maximum loan size in the USDA mortgage program.

How do I know if the home I’m buying is eligible for a USDA mortgage?

Every home in the United States is either USDA loan-eligible or not. Use a USDA lookup map to search by area or address, or ask us to find your home’s eligibility for you.

Can I rent my USDA-mortgaged home on Airbnb?

Yes, you can rent your USDA-mortgaged home on Airbnb. However, USDA loans are for primary residences only. You’re allowed to rent a room(s) to travelers and can rent your home at times. However, the address of the house has to be where you live for the majority of the year.

Do I have to be a first-time home buyer to use a USDA mortgage?

No, you don’t have to be a first-time home buyer to use the USDA mortgage program.

What should I expect USDA mortgage closing costs to be?

USDA mortgage closing costs vary by the state in which you live, and also by your lender. However, USDA loan costs are usually lower as compared to other low- and no-down-payment home loans.

What should I expect USDA mortgage rates to be?

USDA mortgage rates are lower than mortgage rates for comparable conventional and FHA mortgages. It’s typical for USDA mortgage rates to beat the interest rates of other loan types by as much as 0.375 percentage points.

Dan Green

Dan Green

Dan Green is a former mortgage loan officer and an industry expert. He's appeared on NPR and CNBC, and in The Wall Street Journal, Bloomberg, and dozens of local newspapers. Dan has helped millions of first-time home buyers get educated on mortgages, real estate, and personal finance. Have mortgage questions? Ask Dan in the chat.

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