Since 2009, USDA home loans have helped over 650,000 families buy a home with zero down payment. The popularity of this home loan is no surprise. It’s one of the only 100% loans available in today’s market, plus it allows for lower credit scores and income levels compared to other home loans.
As an added bonus, the USDA loan is eligible in many suburban areas. Every ten years, USDA examines its eligibility maps to make sure it is still serving rural areas, based on the most recent national census. Yet, USDA maps are still based on the census taken in the year 2000. The USDA eligibility map changes have been delayed until October 1, 2015.
This is a golden opportunity for borrowers who live in suburban and rural areas alike to take advantage of the USDA loan’s many benefits. Due to delayed updates to the USDA eligibility maps, cities and towns near major metropolitan areas are still eligible, even though their populations have exceeded USDA’s definition of “rural.”
USDA home loan activity by state
The USDA home keeps gaining steam. Nationwide, home buyers used the USDA home loan nearly 130,000 times in 2013 according to the CFPB, up from 120,000 in 2012. But use of this loan program varies widely by state according to data released by USDA.
It turns out that North Carolina currently holds the title as USDA home loan leader, both in number of loans funded and dollar volume.
Between 2009 and 2013, nearly 36,000 USDA loans were funded in North Carolina for a total of almost $5 billion.
Other states showed nearly as strong numbers during this four year period. Here are the top five states by number of USDA home loans:
- North Carolina: 35,898 USDA loans
- Texas: 35,225 USDA loans
- Michigan: 34,065 USDA loans
- Florida: 31,844 USDA loans
- Louisiana 27,457 USDA loans
Rounding out the top ten USDA states are Missouri, Tennessee, Illinois, Indiana, and Pennsylvania.
USDA loans are popular in every state, but these ten states are especially USDA friendly due to large populations near USDA-eligible areas. For instance, suburbs around Austin, Texas, Orlando, Florida, and Charlotte, North Carolina are eligible. Home buyers can receive a zero-down loan with an incredibly low mortgage rate, and still be within commuting distance of major employment centers. This combination is the perfect storm for high USDA activity.
Buyers are snapping up homes in USDA-eligible areas while home prices are low and USDA loan rates are at historic lows.
USDA loans by dollar volume
Looking at the top ten states by the total USDA loan dollar volume reveals a slightly different list of states. North Carolina is still king, but California squeezes into the #5 spot, edging out Michigan, no doubt due to its higher property values.
- North Carolina: $4.93 billion
- Texas: $4.56 billion
- Florida: $4.07 billion
- Louisiana: $3.90 billion
- California: $3.57 billion
The #6 through #10 spots are filled by Michigan, Washington State, Tennessee, Pennsylvania, and Missouri. The grand total for all 50 states between 2009 and 2013 is nearly $87 billion in USDA loans funded.
USDA home loan advantages
Many home buyers assume that zero-down financing such as the USDA loan is incredibly difficult to qualify for. But that is not the case at all. USDA loans are on par with FHA as far as qualification standards, and are even easier to qualify for than conventional loans that require 20% down.
A USDA loan is more affordable than FHA when it comes to monthly mortgage insurance. USDA requires a 0.50% fee annually, or $42 per month for every $100,000 borrowed. FHA however charges 1.35% per year, or $112 per $100,000.
In addition, borrowers with lower credit scores may be approved more easily. Buyers with a 640 credit score are eligible for a USDA home loan. Those with at least a 660 score can qualify even easier.
It’s no wonder that the USDA home loan remains a popular choice for buyers in all 50 states.
Apply for a USDA loan
Home buyers who are curious about USDA loans should contact a lender who specializes in these loans. While the program is administered by the United States Department of Agriculture, private banks and mortgage companies take the application and underwrite the loan according to USDA’s standards.
Check today’s USDA loan rates here. Find out if your city or town is USDA-eligible and if you qualify. USDA loan rates are low and it is a great time to buy a home using this incredible zero-down program.