If you happen to be looking to buy a residential property in a non-metropolitan area, you may want to consult the USDA loan map to determine if the area falls with in the boundaries of an USDA’s eligible rural zone.
The reason is quite simple. USDA guaranteed rural development home loans are about the only source for home buyers planning to secure a zero down payment mortgage. So, if your property is in a eligible rural area and you are short of the down payment required to qualify under other residential mortgages, the best option for your home financing would be to seek a USDA mortgage loan. So, the first step for you before seeking a USDA loan is to check out the USDA home loan map.
Importance of USDA Rural Development Loan Map for Rural Home Buyers
The rural area designation is the major aspect in which USDA loans differ from other government sponsored home lending and insurance programs offered through the FHA and VA. Even if a borrower meets all the requirements and qualifications related to credit and income, the USDA lending guidelines strictly require that the property is located in a eligible rural zone. Therefore, the most obvious step before embarking on securing USDA guaranteed loan financing is to check on your property’s rural area designation status. This can be easily determined using the loan map search option on USDA rural development website.
The USDA loan map is created based on the census data conducted once every decade to determine the population changes across the country. Depending on the updated census data, some of the areas may become fall with in or our of a qualified rural area.
Upcoming Changes to USDA Property Eligibility Maps
A number of changes are expected to come into effect from October 1, 2015 as far as the USDA eligibility map is concerned. About one-third of the US population (110 Million) currently reside in rural areas that are qualified for USDA financing. About 500 geographical areas of about 10,000 square miles will be removed as they no longer meet the guidelines for determining USDA’s eligible areas. While this may look like a very small number when compared with the total land area of the country, the actual impact is quite big. The proposed reduction of just 0.3% of the eligible land mass under the new USDA rural development loan map changes will make about 9 million ineligible for USDA loan funding.
After the introduction of the new USDA home loan map changes, there will be a significant impact on first time home buyers and low income families that are looking to purchase a home in these newly ineligible rural zones. Their options for getting home loan financing with zero down payment will be very limited. Based on the current residential lending landscape, only the Veterans Administration guaranteed loans are about the only option. Even those are not going to be enough as they are just limited to eligible veterans.
USDA Loan Map Changes and Rural Property Eligibility FAQs
Can I apply for a USDA loan in a soon to be ineligible area under the proposed changes?
The short answer is “Yes”. Up until September 30, 2015, USDA will still consider all loan applications for financing in these soon to be ineligible areas as qualified as they would satisfy their property eligibility requirements up until that point.
Basically, this means the USDA lender handling your rural development housing loan must submit the complete loan file to the local USDA RD office before the end-of-business on September 30, 2015. Loan files received until this point will be processed based on the existing USDA rural boundaries.
Incompletely submitted USDA loan files will not be processed under the old eligible area boundaries. Therefore, it’s critical that you allow yourself enough time to deal with any delays that may come your way during the RD approval process.
Will I still be able to refinance my existing USDA loan even if it’s going to no longer fall in an eligible area?
Existing homeowners with USDA loans will not be affected regarding their ability to refinance even if their property no longer falls in a USDA eligible zone. As long as you meet the USDA refinance requirements, you’ll not have any problems regarding eligibility.
Are USDA loan boundaries the same for all lenders underwriting and funding USDA mortgage loans?
While the credit and income guidelines and requirements may vary among the different USDA lenders, the one aspect of USDA loan underwriting that is beyond their scope of determination is the eligible rural area. No matter which lender you choose to work on your USDA loan application, the property eligibility requirement is the same, and it can be determined by anyone by searching for your address on the USDA loan map.
For how long will the new USDA rural area boundaries expected to be in place?
As the census happens once every decade, the loan area boundaries are not expected to be reviewed until after the next census in 2020. So for the next 5 – 6 years, the new USDA loan map showing the eligible rural areas will be used to determine the property eligibility for rural development housing loans.