The USDA home loan eligibility map changes scheduled for October 1, 2015 have been postponed until October 1, 2017 at the earliest.
On December 16, 2014, the President signed into law the Continuing Appropriations Resolution, 2015. This law postponed most changes to USDA eligibility maps, although as part of this bill a handful of communities experienced minor eligibility changes on February 2, 2015.
According to a source within USDA, there will be no additional changes to eligibility maps for the foreseeable future. Going forward, maps will be reviewed every three to five years. The last review was completed in 2014.
Therefore, the USDA eligible areas will not change until at least October 1, 2017 and as lat as 2019.
USDA maps have remained largely unchanged despite scheduled updates in 2013, 2014, and 2015. Proposals to update the maps based on the 2010 census have been unsuccessful each year due to concern about the impact in smaller communities.
This is a great opportunity to take advantage of very generous USDA loan boundaries that allow buyers in many suburban areas around the country to participate in the program. The eligible areas are based on town and city populations during the census in the year 2000 – over 15 years ago.
Prospective home buyers should get pre-approved for a USDA home loan and take advantage of lenient eligibility standards.
The USDA Loan
One of the best mortgage products available today is the USDA home loan. It allows borrowers to purchase a home with zero down, as long as the home is within a “rural” geographical area as designated by USDA.
USDA is a little different than other government-backed programs like FHA and VA, in that the first thing the lender will review is the location of the property. (See our USDA page for complete guidelines.)
Even if the borrowers are fully qualified from an income and credit perspective, the USDA loan cannot be approved if the property is not located in an eligible area.
And these eligible geographic areas are about to change, but you can apply for a USDA loan here and ensure you are able to use USDA financing for your home purchase.
USDA Eligible Geographical Areas tied to Census
The United States conducts a census every 10 years. The 2010 census revealed changes to populations around cities and towns that would have made some areas ineligible for USDA financing based on population. However, as part of legislation passed in 2014, “rural” was redefined to include most areas that have historically been eligible for the program.
Many people have moved away from sparsely populated areas and closer to cities and suburbs since the year 2000. That is when the census upon which current eligibility maps are based was taken. Because of population trends, many areas have exceeded “rural” population limits set by USDA originally. However, due to definition changes, more highly populated suburban areas remain eligible.
2015 USDA Map Changes Avoided
A 2011 analysis performed by the Housing Assistance Council indicated that with the new population count, as many as many as 500 geographical areas would no longer be eligible for USDA financing. More than 10,000 square miles of eligible area would have been removed from USDA loan maps based on the law at the time.
The data indicated that about 34 percent of the US population resided in USDA-eligible areas. If boundaries changed, the USDA-eligible population would have decreased to about 26 percent.
Such a big drop in USDA eligible home buyers may have put a strain on mortgage credit availability in smaller communities. Besides the VA home loan, USDA is the only zero down mortgage program available today.
Fortunately, new policies kept this loan product available at least until 2017.
Current and Future USDA Loan Eligibility Map
Up until late 2014, USDA featured a future eligibility map. It showed major changes around suburban areas. However, they removed that map and added a different map in February 2015: “Previous Eligible Areas”. The map of previous areas is almost identical to the current map; just a handful of communities experience a change from “rural” to “non-rural” status.
When the future eligibility maps were live, they revealed significant changes around Seattle, Washington, and also Dallas, Texas, and Las Vegas, Nevada. Potential home buyers in these and many other areas still have the opportunity to buy with a zero-down USDA loan.
- Current USDA-eligible areas cover 97% of the nation’s land mass
- There are 109 million people living within USDA-eligible areas
- About 9 million people would have no longer been eligible for a USDA loan had the October 1, 2015 changes been kept in place.
- New USDA boundaries would have reduced eligible land mass by only 0.3%, but the number of USDA-eligible buyers would have dropped by 8%.
Q&A about USDA Geographical Boundaries
If USDA maps change in 2017, what is the absolute latest date to apply for a home that will no longer be eligible? Hypothetically, if maps change on the earliest potential date of October 1, 2017, your loan file would need to be submitted to your state’s Rural Development office by end-of-business on September 30, 2017. Only a USDA-eligible lender can submit your file to USDA, usually after a preliminary review by your lender’s USDA underwriter.
If the RD office receives your file in time, it would be processed according to current boundaries. But this only applies if your file is complete. Make sure your lender has submitted all necessary elements of your file to your area’s RD office in time.
If the file is incomplete or USDA did not receive the file before October 1 on the year of the map changes, your application will not be approved if the home is outside the future USDA eligible boundaries.
Can I refinance my USDA loan after a map change? Yes. As long as you have a USDA loan and meet other USDA refinance qualifications, you can refinance even though you are no longer in a USDA-eligible area.
Do all lenders follow the same USDA boundaries? All USDA lenders must follow all current USDA loan underwriting guidelines, including eligible property boundaries.
Does the property have to be in an eligible area if I apply directly with the USDA for my loan? Yes, regardless of where you obtain your USDA loan, property location is required to be in an eligible area.
Apply for a USDA Loan
Take advantage of today’s generous USDA eligible boundaries. Rates are low and homes are available in many desirable areas.
Tim Lucas (NMLS #118763), Contributor/Editor
Tim Lucas is a mortgage writer with over 11 years of experience as a loan originator, processor, and team manager. Get a live rate quote for your home purchase or refinance at MyMortgageInsider. Visit Tim on Google+ and Twitter.