How Does the USDA Rural Housing Guarantee Loan Program Work?

Home / Blog / How Does the USDA Rural Housing Guarantee Loan Program Work?

How Does the USDA Rural Housing Guarantee Loan Program Work?

The USDA Rural Housing Guaranteed Loan Program is an important option for low-to-moderate income individuals for obtaining financing for housing.

According to the USDA, the Rural Housing Guaranteed Loan Program, "assists approved lenders in providing low- and moderate-income households the opportunity to own adequate, modest, decent, safe and sanitary dwellings as their primary residence in eligible rural areas.”

Approved applicants may use the funding to build, rehabilitate, or relocate a dwelling in an approved rural area.

How Does the Program Work?

Despite its name, applicants don't receive funds from the USDA itself. Instead, the applicants receive loans from third-party lenders that are backed by the U.S. government.

Specifically, the USDA offers a  guarantee to approved lenders to reduce the risk of extending 100 percent loans to eligible buyers who reside in rural areas. 

What Are the Benefits?

The Rural Housing Guaranteed Loan Program offers several key benefits to eligible participants:

  • Loan access: The primary benefit of the USDA loan program is extending loan financing options to low to moderate-income individuals and families.
  • Lower interest rates: Backed by the USDA, lenders are generally comfortable offering recipients lower interest rates on loans. These rates are often lower than the standard rates for 30-year, fixed-rate mortgages.
  • No down payment: Qualified buyers can purchase a home with no down payment, significantly reducing the up-front costs required to own a home. This also means there is no private mortgage insurance (PMI) required—buyers will need to pay an upfront premium that is similar to PMI, but this typically costs less than PMI plans and can be financed into the loan itself.
  • No credit score requirement: The USDA loan program itself does not require applicants to meet credit score thresholds. However, many lenders will have their own credit score requirements that must be met before financing is offered.

Am I Eligible?

To receive this financial assistance, applicants must meet certain criteria:

  • U.S. citizenship, or status as a non-citizen national or Qualified Alien
  • Annual income must fall within certain limits
  • Purchased property must meet all program criteria
  • Agree to personally occupy the home as the primary residence
  • Show a legal capacity to incur the loan obligation
  • Have not been suspended from participation in federal programs
  • Demonstrate the willingness to meet credit obligations in a timely manner

For most people considering this loan, income eligibility will be the most significant criteria.

To qualify for the Guaranteed Loan Program, applicants can have an annual income of up to 115 percent of the median income for the area.

Cost of living and income rates vary widely in California; to see whether your income level qualifies for this program, you can find a full listing of state income limits on the USDA’s website.

Are you a California resident or just interested in learning more about low-interest housing loans? Übermortgage is here to help. Contact us today to discuss whether you may qualify for government-backed financing to support your dreams of home ownership.


f8e9474e 4b73 48b3 b88b 2c2c8d409287 3083fcac c1b7 4ee2 9ea9 bd7d1633e87a 4b46696f 60b9 435e a3f7 436f94148e35 6fd55980 a160 4112 a33f 20fddbb242fd c9d5bd02 30bf 44c3 bf6d 619c2c63f8c7 b2c74624 00f6 437c 8f5d 14fd91fb7ea3 2dbadae6 b05e 43d6 b09c 6097d207a40a 2cd88b3e b7fc 4910 88fb f63b68a90c8e 88130028 7827 4567 ae6c d30aecb7e3b7 9d680f70 59ef 47f1 9ceb eb3e078fe679 8f10d3ba 7835 47a5 ac6a cb4ff098ba18 4664b006 70d1 4731 965a 8ec6221bb8ad 67530444 a798 465c 8710 762bb79d0804 c6d23a19 dcc5 4916 a1fb 485a9bfdd2d1 bd3a531b 626b 4b5b 843d 02f8799b7c06 f4b239f7 44c1 4405 abe1 58b2ee0b6398 234ed401 155f 4394 8dc1 d767fa5ca414 36621991 767e 4b60 8406 85cde4ee8b27 25db635b 7b0e 46d2 b71d 7ca7fe5f7ba2 a0c767c2 59fe 419e 9b48 c407a526b260 1d71abb8 c2e5 4d49 aa71 a8cc636ea596 add0d519 10a1 4396 8475 144d23db2c96 a1b764a6 23c4 4f29 bbdc e5e115a0f7bf