USDA

USDA Loan Overview

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.

Much of San Luis Obispo county counts as “rural,” defined as open country, places with population of 10,000 or less and—under certain conditions—towns and cities with between 10,000 and 25,000 residents. The program offers financing to households with up to 115 percent of the median income of the area.

For more information go to www.rurdev.usda.gov/Home.html.

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Section 502 Housing Qualifications

The terms of eligibility are determined by location of the property, the price of the house and size of family income.

Property locations in “rural” settings qualify. To determine which properties apply, go to ww.usda.gov, find the Rural Development department and click on the “eligibility” tab. Follow directions to enter the address of the subject property to see if the targeted house is eligible.

“Housing must be modest in size, design, and cost”, however there is no maximum purchase price limit.

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Income and Personal Finance Eligibility

Applicants for this loan may have income of up to 115 percent of the median mark for the area. In San Luis Obispo County, families of 1-4 people can make a maximum of $85,550 to qualify and families of 5-8 people can make a maximum of $112,950. For more information and other county qualifications, see the website.

Minimum credit score: 580.

Debt-to-income ratio (DTI): 45 percent.

Purchase must be owner-occupied property.

3.5 percent funding fee that is financed into the loan.

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Special Features

No down payment.

Minimal mortgage insurance required (0.3 percent).

Greater leniency: greater forgiveness for derogatory credit items..

Not limited to first-time buyers.

Assistance options allowed, such as gifs, grants, and seller concessions.

Improvements and repairs can be included in loan.

Closing costs can come from any source.