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USDA Home Mortgages

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What is a USDA Home Mortgage?

Officially known as the Section 502 Single Family Housing Guaranteed Loan Program, the USDA loan is a $0 down mortgage option available to rural and suburban homebuyers in the United States. USDA loans are issued by qualified lenders and guaranteed by the U.S. Department of Agriculture (USDA).

The USDA loan’s purpose is to provide low-to-moderate income households the opportunity to achieve the dream of homeownership in eligible rural areas, and does so by guaranteeing each USDA loan against default. This guarantee allows for amazing benefits, such as zero down payment, low rates and lenient credit requirements.

How USDA Home Mortgages Work

The USDA does not finance single-family guaranteed loans, but guarantees the loan against default. Because of the USDA loan guarantee, lenders can take on more risk and offer eligible rural homebuyers advantageous rates and terms.

The USDA has its own guidelines and requirements, including eligibility requirements for both the homeowner and property. Moreover, lenders may have their own internal guidelines and requirements in addition to those set by the USDA.

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