USDA is usually a label you find on meat and produce. It is part of the inspection and approval rating process for all food grown and raised on a farm. What you did not know is that USDA also provides no money down loans to homebuyers for buying and developing property. Here is more about USDA and its mortgage loans so that you can have a better understanding regarding this type of mortgage and what your options are.
USDA stands for "United States Department of Agriculture." This government department is responsible for all things agriculturally related, and all of the activities and programs that the department oversees. This includes their mortgage loans and lending programs, which have been part of the department for many years now.
The USDA has two main primary loan programs. The first is the USDA wholesale mortgage, which provides mortgages to first-time homebuyers at special interest rates, zero money down, and additional PMI. Eligibility is based on income, the property being purchased, the location of the property, and to some extent, the borrower's credit. In almost all instances, the home you want to purchase must be in a rural area to qualify for a USDA loan.
The second type of loan is a USDA Streamline Assist loan. This is the USDA's refinancing program for homeowners who have made twelve consecutive payments on time but were unable to get a decent interest rate when they initially applied for the standard USDA mortgage. You have to have a USDA mortgage for all of the previous year, or you cannot apply for the "streamline assist" loan. There may be a few other quid pro quos as well. Check with your USDA originator and guarantor to see if you would qualify for a refinanced version of your mortgage. The refinanced monthly payments MUST be at least fifty dollars less than your current monthly payments or the refinanced loan will be denied.
Taking Advantage of a USDA Loan Program
If you want to buy a rural home, a hobby farm, a small farmette, or farm property that is not currently working as a farm, you can try to get a USDA loan. The main objective of USDA is that people applying for a USDA loan promise to live on the property as their main living space and home for all of the length of the time of the loan. Whether or not you develop the property into a full working farm or horse ranch is up to you.