What is a USDA loan and is it right for you?

While homebuyers often focus on conventional and FHA mortgages, USDA loans can provide another path to homeownership for those looking to live outside the city. Backed by the U.S. Department of Agriculture, this mortgage option exists to support homeownership and economic development in eligible rural communities.

The biggest benefit of a USDA loan is the ability for qualifies borrowers to finance a home with no down payment. And despite the name, these loans aren't just for farmers or remote properties. Eligible areas can include small towns and some suburban communities.

Understanding what a USDA loan is and how it works can help you determine whether this solution fits your location, income and goals.

A USDA loan is a government-backed mortgage program designed to encourage low- to moderate-income homeownership in eligible rural and suburban areas. Most USDA mortgages are issued by approved private lenders and guaranteed by the U.S. Department of Agriculture.

The government guarantee reduces lender risk, allowing qualified borrowers to purchase eligible homes with no down payment and potentially flexible qualification requirements.

And while USDA loans have location restrictions, they might be available in more areas than you'd think. "One of the biggest misconceptions is that USDA loans are…

Original source: https://www.usatoday.com/money/