USDA Home Loans In Massachusetts – Quick Overview – Boston Lender Tips

USDA home loans are also referred to as rural development loans. These have the backing of the United States Department of Agriculture (USDA) and are available in areas of Massachusetts that qualify as rural development areas.  Not many people are aware that such a loan program exists, and many become hesitant when they hear the words “no money down” and “low interest rates.”

usda home loan mortgageThe benefits of the USDA loan program are:

  • 100% financing up to the appraised value of the property
  • no private mortgage insurance (PMI) for Massachusetts qualified homes
  • flexible credit qualifications
  • no limitations on loan amounts.

The government created this loan program to help build up the rural areas across the nation.  Because of this, home locations within major cities are not eligible for a USDA loan.  However, there are many Massachusetts homes that do qualify for a rural development loan because they are situated on the outskirts of major metropolitan areas.  The greater Boston area has rural areas that meet the guidelines.  Eligibility is based on the Massachusetts property’s being in an area of fewer than 20,000 residents and outside city limits.

Other restrictions affect qualification for the USDA loan eligibility.  There are three basic factors that need to be met in order to qualify.

  • Worthiness of Credit.  This program does not use a strict credit score as a qualification guideline. Instead it looks at your credit history to determine credit worthiness, for example bill payment history.  Blemishes on your credit report may be overlooked if your history shows reestablishment of good credit practices over a 12-month period.  It is recommended that any open judgments or collections be paid off prior to closing on your USDA loan.
  • Loan Income Limits and Restrictions. There are income limits based on the county where you are purchasing your home.  Your income level cannot exceed the current USDA yearly income limit.  Documents will need to be provided for a USDA loan, for example, a 2-year history of steady employment.  There are possible exceptions that can be made, such as for newly graduated students who just entered the workforce.
  • Ownership of Additional Property. The USDA does not allow home buyers purchasing a home under the USDA loan program to own another livable property.  This loan is specifically for buyers who don’t qualify for other financing options and don’t have current adequate housing.  Exceptions to this may be if you are moving and your current home is too small or not fit for living standards.  Manufactured and mobile homes are not considered adequate property by the USDA.

If you are eligible and qualify for the USDA loan program, you are helping your family realize the dream of owning your own home and helping rural communities thrive and prosper by purchasing a home in a rural area.  This is a great way for moderate to low-income families to buy a home that requires no money down.

Phil Ganz (354 Posts)

Philip D. Ganz is a Boston Mortgage Broker and Boston Home Loan specialist. For information, expertise, consulting, or advice about home loans, refinancing mortgages, or commercial property loans, contact Phil with no obligation: 617-529-9317

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