Most lenders would typically ask you to pay at least 20 percent of the total loanable amount of a loan. And coming up with the funds to pay for it can be quite a challenge. That's why the federal government and the Department of Agriculture have developed a program that aims to help very low income generating loan applicants apply for a mortgage.
The United States Department of Agriculture Home Loan is similar to the Veterans Assistance Loan and originated with President Franklin D. Roosevelt, through Executive Order 7027. Created during the Resettlement Administration, it aims to help relocate families who were greatly affected by the Depression. It was made to help restore areas which were affected by severe soil erosion and even assist farmers with mortgages to be used for their equipment and maintaining their lands. In the year 1946, the administration made through the Executive Order 7027 was then included in the Farm Security Administration which later became the Farmers Home Administration. The Farm Home Administration was then authorized by the congress to provide financing assistance for housing, community, and business facilities in certain rural areas.
The Current United States Department of Agriculture still carries the same legacy that was left behind by the Farm Home Administration; assisting eligible home buyers the a bility to purchase properties in certain rural areas. The USDA currently has a loan portfolio of at least $86 billion and is providing assistance of at least $16 billion in program loans, grants, and also loan guarantees.
A USDA-backed home loan program is only available for lenders who work with the United States Department of Agriculture. What's good about the loan program is that it provides eligible borrowers with 100 percent financing on their loans. This means that they no longer have to worry about paying any down payment which makes it much easier to purchase a home.
However, for an applicant to fully utilize the loan, the property must meet the USDA's requirements. The loan applicant should fully document the household income and should not exceed at least 115 percent of the area's median income. On top of that, the real estate property should be located in an area that's within the USDA Rural Development Map and can be identified via zip code. All states have certain rural areas that are eligible for a USDA loan.
The USDA loan program is facilitated by the USDA or the United States Department of Agriculture. While the program was originally aimed tat helping to develop rural areas, there are now actually suburban areas that also qualify for a USDA home loan.<< Back to the list.
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