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Is a USDA Mortgage Right for You?

Here's one government agency you might not associate with mortgage lending: the U.S. Department of Agriculture.

The USDA can provide another mortgage option for potential rural homeowners who might be having trouble with other lenders. These loans are backed by the government, which means that homebuyers don't need to make a down payment to get approved for a loan.  

The government offers a 90 percent reimbursement guarantee to lenders who offer these loans, which reduces their risk for losses if someone defaults. This results in lower interest rates for those approved for USDA loans, making them attractive to eligible buyers, according to The Mortgage Reports. But not everyone can qualify for these loans.

While a large swath of U.S. land is eligible for USDA housing, 3 percent of the country's land mass is not. Homebuyers can check if they live in an area that's approved for USDA loans by going to its website and plugging their address into the agency's database to determine whether they qualify. Potential buyers must also fit into a particular income range in order to qualify for a USDA loan, but the specific range will vary from state to state.[can you give an example of one or two states?]

These loans are a viable option for many rural homeowners at a time when there is a shortage of affordable housing in rural communities, according to Realty Biz News.

The average income in USDA housing is $12,729, and the USDA estimates that more than $5.5 billion in funding is needed over the next decade to maintain its current housing options. Those looking low-income housing can check how many USDA properties are available in their state by visiting the agency's website.