What Rural Areas qualify for USDA loans?

What Rural Areas qualify for USDA loans

The USDA home loan program, one of Rural Development’s three divisions, invests in creating a safe, clean, and modest living environment for individuals who reside outside of our cities. The housing program ensures that housing is available and affordable in rural communities, whether it’s through a loan or loan guarantee to purchase a home, loans, and grants to make necessary repairs, or even rental assistance and financing to build affordable apartment complexes for families or seniors.

Rural area refers to any locations other than a city or town with a population of larger than 50,000 inhabitants; and the urbanized area contiguous and adjacent to such a city or town, according to the USDA.

What is considered Rural Area?

The phrase “rural” brings up ideas of farms, ranches, villages, small towns, and open areas that are generally shared. On the other hand, researchers and politicians use a bewildering assortment of categories to separate rural from urban areas. The use of numerous categories reflects the fact that rural and urban areas are complex notions that are difficult to distinguish. Is it population density or geographic remoteness that is the more pressing concern? Is it the modest population number that necessitates the distinction between rural and urban areas? If that’s the case, how small is rural? 

Because so many individuals in the United States live in places that are neither obviously rural nor urban, seemingly minor changes in how rural areas are classified can have significant implications for who and what is considered rural.


How does a Rural Area Work?

Beginning with the fiscal year (FY) 2022 funding announcements, USDA Rural Development will incorporate major priorities into program scoring and associated funding releases. By connecting funding assistance to important priorities, several USDA Rural Development grants and technical assistance programs have the potential to boost rural communities’ economic development efforts as well as maintain and promote a healthy rural population.

USDA Rural Development has established three major priorities that will pave the way for economic prosperity for all rural Americans, and Applicants are encouraged to consider projects that will advance these three priorities.

  • Assist rural communities, particularly impoverished communities, in recovering economically from the COVID-19 pandemic’s effects.
  • Assuring equal access to RD programs and benefits from RD-funded projects for all rural residents.
  • By providing economic support to rural communities, we can reduce climate pollution while also boosting their resilience to the effects of climate change.

What are the USDA key factors for a Rural Area?

  • Business and Industry 

While agriculture, forestry, and mining are still vital in some rural regions, the service and retail industries have accounted for the majority of job growth in rural America in recent decades.

  • Natural Amenities

The ERS has created a study program that demonstrates how topography and climate have shaped the geography of rural expansion and decline.

  • Rural Classifications

Beyond the metro/nonmetro divide, ERS maintains essential county classifications that quantify rurality and analyze the economic and social variety of rural America.

  • Rural Poverty and well being

The economic, social, spatial, temporal, and demographic aspects that affect the poor status of rural populations are the focus of ERS research in this field.


Pros and Cons of a Rural Area


  • Interest Rates That Are Extremely Attractive
  • Based on the appraised value, there is the possibility of 100% financing.
  • There are no limitations on the amount of money you can borrow.
  • Cash Reserves Aren’t Necessary
  • The seller may be responsible for closing costs.
  • Credit Guidelines Have Been Relaxed
  • Paying off your debt early is not subject to any penalties.


  • Only residences in specific areas qualify for USDA home loans in Texas
  • Borrowers’ income is limited.
  • There are no investment or vacation homes available.
  • Insurance on your mortgage is required.
  • Refinancing with a cash-out option is not permitted.

Please contact the Texas Mortgage Pros today to help you get the best rates and the best service.

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