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If you’re a low to moderate-income family and don’t qualify for any other financing, you might be eligible for USDA financing. The USDA doesn’t require a down payment, and they have flexible guidelines.
Before you determine if you’re eligible for a USDA loan, you should understand how USDA eligibility maps work to determine which homes you can buy using USDA financing.
What Are USDA Eligibility Maps?
USDA eligibility maps show you where the USDA will allow their financing to purchase homes. As you can see when you browse locations in your area, the USDA doesn’t define ‘rural’ homes the same way anyone else might. You’ll be pleasantly surprised if you picture cornfields and living out in the middle of nowhere.
USDA loans are available in areas just outside of urban areas. It depends on the area’s population (fewer than 20,000 people). These areas could lie right on the border of a major city yet provide you with the benefits of a USDA loan (no down payment and flexible underwriting requirements).
How to Use USDA Loan Eligibility Maps in Your Area
The USDA makes it very simple to use the USDA eligibility maps in your area. Start by clicking on the map and entering your address. It will tell you immediately if the address is eligible for USDA financing. Make sure you include the zip code for the most accuracy.
If you don’t have a specific address, do the following:
- Zoom out and look at the map of the area. If the area is covered in orange, it’s ineligible for USDA financing, but areas outside of the orange are eligible.
- Click the pushpin at the top of the screen and place it in an area you’re interested in buying. It will tell you immediately if that location is eligible for USDA financing.
- You can keep trying new pushpin locations by clicking the pushpin again and placing it in another location.
What Does ‘Property Eligibility’ Mean?
The location is just the first factor to consider when applying for USDA financing. Even homes located within a rural area still must prove their eligibility. This means the property is safe, sound, and sanitary. The USDA only funds loans on move-in-ready homes, modest for the area and a good buy for borrowers.
Because the USDA guarantees the loans for mortgage lenders, they only want to lend money on homes they know they could take possession of and sell to get their money back to keep insuring loans for low to moderate-income families.
USDA Property Eligibility Requirements
The USDA property eligibility requirements aren’t as strict as they might sound, and they aren’t anything you wouldn’t want in a home anyway.
Here’s a quick breakdown of what the USDA requires:
- Year-round access to the home from the street
- Proper heating and cooling systems
- Sanitary water supply year-round
- All utilities in good working condition
- A roof with a decent amount of life left
- Must be a single-family property
- The home must be modest in size and features for the area
What Qualifies as a Designated Rural Area?
As discussed above, the USDA may have slightly different qualifications for ‘rural’ than most people think.
- The area doesn’t have more than 10,000 people
- The area has over 10,000 people but less than 20,000 and isn’t part of a metropolitan statistical area (MSA)
- The area doesn’t offer any other loan programs for low-income families
The easiest way to tell is to use the USDA eligibility maps. However, if you think a home falls on the border of rural and not, you could always contact the USDA and petition for the property you’re interested in buying.
Bottom Line: USDA Eligibility Maps
USDA eligibility maps are a great tool when deciding if you can afford a rural property. USDA loans are flexible in their underwriting, but you and the property must first prove eligibility for the program. Finding a property within the rural boundaries the USDA set (they change periodically) can help you start on the right path to securing this attractive financing option.