The United States Department of Agriculture (USDA) offers a variety of loans to assist low- to moderate-income individuals in buying, repairing, or renovating a home in a rural area. Some of the popular loan types include the single-family direct homeownership loan, the single-family guaranteed homeownership loan, the rural repair and rehabilitation loan or grant, and the mutual self-help loan. This guide will help you understand these loans and determine if you qualify.

Though the terms and details of these loans vary, they all offer very low effective interest rates (some as low as 1 percent) and do not require a cash down payment. To qualify, you need to have a decent credit history. These loans provide an excellent opportunity for those looking to buy or improve a home in a rural setting.

Why a USDA Loan?

There are many benefits, including: no down payment required; borrowers who qualify for a USDA Rural Development home loan have the flexibility to pay nothing out of pocket for a down payment. Additionally, the USDA Loan allows borrowers to use a gift or grant to go toward their mortgage.