Qualifying for a USDA mortgage works a little differently than any other type of financing because of the boundary restrictions. Technically, a home must be located within a “rural” area in order to qualify. What you consider rural might be different than what the USDA deems as rural, though, which is why it is important to know how to use the USDA Rural Eligibility Maps.
How Rural Eligibility Maps are Created
The first thing to understand is how the Rural Eligibility Maps are created. The USDA relies on census data in order to create the maps. This means that the rural eligibility of an area remains the same for at least ten years, but sometimes longer. For example, during any year up to 2010, the USDA used the census tracts from 1990 and 2000 along with a population maximum of 25,000 to determine which properties were considered rural.
When you look at an eligibility map, you are not looking at a specific town, but rather an area of the town as some towns are large enough to have different census tracts. If there is any area of town that the population is too large to qualify for USDA eligibility, the town could be split in regards to what is considered rural and what is not.
Using the Map
In order to determine if a property you are interested in is eligible, you must do the following:
- Visit the USDA map here
- Choose the program you are trying to get approved for – typically USDA Guaranteed
- Click on property eligibility
- Accept the disclaimer
- Type in the specific address you are looking at as a possibility to purchase
- If the home is not eligible, you can view the areas surrounding it that are eligible to see if there is a home you would be interested in purchasing
Beyond the Map
Before you start searching for a home that is eligible for USDA financing, you have to determine if your household income is within the limits the USDA allows. This will require you to do a little more work on the USDA website to determine your eligibility. On the same website, you will click income eligibility. From there, follow the below steps:
- Choose your state
- Choose the county the home is located
- Enter the number of people in your household
- Enter the number of children under the age of 18
- Answer whether or not you, the applicant, is over the age of 62
- Answer whether or not there are any disabled residents living with you
You will then see the maximum household income for the area. You can make up to 115% of that maximum income in order to qualify.
When you combine the USDA eligibility maps with the income requirements, you can determine your eligibility for the loan program. If you are eligible, make sure to have all of your documents together and ready to go when you apply for the loan.
The USDA loan program takes a little longer to get through the process than standard loans because the USDA has to have final approval on the entire package. It is up to the USDA lender to provide the USDA with a complete package in order to avoid delaying the closing process. You are not able to go to the closing table until the USDA provides its seal of approval on the loan, which is why doing your homework and determining your eligibly and what you have to provide ahead of time can really save you time on your loan.
