To see if the property you are interested in buying or selling qualifies for a USDA Home Loan click here. Granted it may not work for many properties in Los Angeles, but a vacation home or income property you own may qualify.

There are two types of loans.

Section 502 Rural Housing Direct Loans.
These loans, which allow for 100% financing (even in today’s market) are directly funded by the Government and are available to low- and very low-income households to obtain homeownership. The mortgage payments are based on the household's adjusted income (and the mortgage can span up to 38 years to enable affordability). These loans can be used to purchase an existing dwelling, a vacant lot upon which to construct a dwelling, or to purchase newly constructed dwellings located in rural areas. Funds can also be used build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities.

Property Eligibility.
To check if your property is located in a "rural" zone click here. Under the Section 502 Rural Housing Direct Loans Program, the housing must be modest in size, design, and cost (in relation to the area), must not have a market value in excess of the applicable area loan limit, and must not have certain prohibited features. Approval is generally given or denied within 30 days of receiving an application.

Applicant Eligibility.
Applicants for direct loans from HCFP must typically have a FICO score above 680 and have very low or low incomes. Very low income is defined as below 50 percent of the area’s median income (AMI); and low income is between 50 and 80 percent of AMI. The applicant must also be able to show that they are without adequate housing, but able to afford the mortgage payments, including taxes and insurance, which are typically must fall between 22 and 26 percent of an applicant's income. The promissory note interest rate is set by HCFP based on the Government’s cost of money. However, that interest rate may be modified by a payment assistance subsidy.

For example, in Los Angeles County an applicant can earn up to $44,000 a year and still qualify for the Section 502 Direct Rural Housing Program. Don’t qualify? Applicant’s can earn up to $90,000 to qualify for a Guaranteed Rural Housing Program Loan (Discussed Below).

Section 502 Single Family Housing Guaranteed Loan Program.
Unlike the Direct Loan program, these loans are provided through approved lenders, do not require a down payment, are fixed for 30 years, and carry an interest rate set by the lender. However, unlike the Direct Loan Program, the lender must also determine repayment feasibility, using ratios of repayment (gross) income to PITI and to total family debt.

Although meant to help low-income individuals or households purchase homes in rural areas, these loans have a higher income eligibility threshold. To check your income eligibility click here. These loans can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities.

Approved Lenders.

• Any State housing agency;
• Any Lenders approved by: (a) HUD, (b) the U.S. Veterans Administration; or (c) Fannie Mae or Freddie Mac for participation in family mortgage loans;
• Any Farm Credit System institution with direct lending authority; or
• Any lender participating in another USDA Rural Development and/or Farm Service Agency guaranteed loan program.

For more information, please visit the United States Department of Agriculture Rural Development Home Page.