USDA Home Loans

The USDA loan offers a low rate and flexible qualification for for middle- to low-income buyers in rural areas

The United States Department of Agriculture’s Rural Development Administration offers 30-year home loans (Section 502 loan) to improve the quality of life and economy in rural areas. This USDA program offers the best terms for new and mid-to-low income buyers.

Much of San Luis Obispo County counts as “rural” and is eligible for USDA financing. Qualifying households may have up to 115 percent of the median income in the area. Call us at 805.543.LOAN or send us an email here to learn if you qualify.

USDA Loan (Section 502)

The USDA loan targets rural, middle- to low-income borrowers that don’t have the means to make a down payment and pay large mortgage insurance premiums.  The primary two qualification standards are location (rural) and income (up to 115% of area’s median).

In San Luis Obispo County, families of 1-4 people can make a maximum of $86,700 to qualify and families of 5-8 people can make a maximum of $114,450.

The Basics:

  • Down payment: as low as 0%
  • Credit score: as low as 550
  • Debt-to-income ratio: as high as 31% housing ratio and 43% total debt ratio
  • Gift payments: allowed; gifts, grants, and seller concessions
  • Rate and Term: fixed (30-year)
  • Ceiling: no purchase maximum, but must be “modest in size, design, and cost”
  • Occupancy: owner-occupied, primary residence only
  • Mortgage Insurance: yes; up front and monthly fees apply

More About USDA Home Loans