The government provides a variety of different programs suitable for first-time or low income homebuyers. Among those programs is the USDA program. This unique mortgage product enables borrowers with low income to qualify for home ownership. It does not require any down payment and offers lower interest rates than conventional financing, in most cases. In order to qualify for the program, you not only have to meet the income guidelines (you cannot make more than allowed for your area), the must meet the USDA property eligibility guidelines.
The USDA Maps
The USDA makes it very easy to determine if your property qualifies for USDA financing. The USDA updated the maps as of February 2, 2015, and they still remain in effect today. The maps, which you can find here, detail exactly which homes are USDA eligible and which are not.
On this webpage, you simply enter the address of the home you wish to purchase or refinance with USDA financing. The map will come up with either a message stating that the property is eligible for USDA financing or that it is not eligible for USDA financing.
If you do not have an exact address of a property yet, you can find general areas that have USDA eligible homes with the same map. Rather than entering a property address, you can zoom in on the map. When you find shaded areas on the map, those are the areas that are eligible for USDA financing. From there, you can search for homes in that vicinity in order to use USDA financing.
It is important to note that when you look at a general area of a map, you cannot assume that an entire town is eligible for USDA financing. You need to look as closely as evaluating both sides of the street of any given area. One side might be considered rural while the other is not. This also goes for entire towns – the town could be split up, so knowing which part of the town the USDA considers rural enough for USDA financing is crucial to your success.
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Does USDA Property Eligibility Change?
The USDA does change its guidelines in regards to USDA property eligibility. They use the census in order to update its guidelines. The more populated an area becomes, the less likely it is to remain eligible. This is because the program began to help the less populated areas begin to build up. Generally, areas with a population of less than 25,000 are able to obtain USDA financing. One way to ensure that you are able to use the USDA program in an area that you see building up is to purchase it with USDA financing before the census changes. How often the USDA changes the property eligibility guidelines varies, however. Up until the year 2010, they were still using maps from 1990 and 2000, so you never know when the eligibility will change.
Your Income Matters Too
In addition to the USDA property eligibility is the need for your income to meet the USDA guidelines. In this case, it does not mean that your income must be high enough for USDA standards. The opposite is in fact true. You need to make sure that your income does not exceed the USDA guidelines in order to qualify. The program began to help lower income families secure safe and sanitary housing and those guidelines are still in place today. Just like you can verify property eligibility on the USDA website, the same is true for income. If you follow this map, you can see the maximum amount of income allowed for the area you plan to move to see if your income falls within the USDA income guidelines. On this page, you will enter:
- The state you wish to reside
- The county where the home stands
- The number of people that will live in your household
- The number of your household members that are under the age of 18, full-time students or disabled
- If any of the applicants are over the age of 62
The site then determines if your income falls within the range allowed based on the allowances the USDA provides for certain situations, such as having children live with you or disabled family members living with you.
It might seem like the USDA property eligibility and income eligibility guidelines make it very difficult to qualify for USDA financing, but the opposite is true. If you do not qualify for conventional financing because your income is not high enough and you purchase a home in a “rural” area as determined by the USDA, you could be a good candidate for USDA financing. Doing your homework ahead of time in order to figure out which properties fit the guidelines as well as if your income qualifies will help you narrow down your choices for financing. If USDA financing is a good option for you, it can provide you with low interest rates, affordable closing costs and great terms that help you make home ownership a reality for you.