5 Myths about USDA Home Loans, Debunked

Many wishful home buyers shy away from applying for USDA home loans, because of the various myths that surround the financing option. As a result, they often end up losing an opportunity of getting financial assistance and various other benefits offered by USDA home loans. To help ensure you get the best possible mortgage option, in this post, we discuss some of the most common myths that discourage home buyers from taking a USDA home loan. Let’s take a look.

Myth 1: USDA is only for first time home buyers

Many existing homeowners believe that they don’t qualify for a USDA loan because they already own a home. This is simply untrue. First of all, a “first-time homebuyer” is someone who has not owned a home in 3 years. Secondly, USDA home loan programs don’t discriminate between a first-time home buyer and existing homeowners. There are, however, some restrictions for existing homeowners.

Myth 2: Only VA loans have zero down payment

While VA loans are one of the most popular loans that require zero down payment, it is a myth that USDA loans don’t provide the same benefit. The fact is, qualified borrowers can finance up to 100 percent of the property value, and realize their dream of owning a home without having to make any down payment.

Myth 3: Rural designated areas are underdeveloped

As the USDA home loan program allows borrowers to buy property in only the areas that are deemed rural, people have a notion that it limits their choice of a home to areas that are underdeveloped. This, however, is not entirely true, as there are many neighborhoods and subdivisions that fall within developed countries. USDA home loans are available in all the developed states, whether Texas or any other state in the US.

Myth 4: It is difficult to qualify for a USDA home loan

As the credit requirement guidelines for USDA home loans are quite similar to the ones for FHA loans, many people assume that need a high credit score to qualify for a USDA home loan. In fact, even if wishful homebuyers, who don’t have an established credit history, may still qualify for a USDA home loan based on their savings, utility bills, insurance premium payments, and other similar factors.

Myth 5: Only farmers are eligible for USDA loans

As the USDA loan program provides assistance for owning a property in the rural areas only, people have the notion that this program provides assistance only to farmers or people who intend to do farming. This, however, is not true. The USDA home loan program aims at helping qualified borrowers with low to moderate incomes to buy affordable housing in the designated areas by the United States Department of Agriculture.


The myths discussed in this post often instill doubts in the minds of prospective homebuyers, discouraging them from applying for USDA home loans. No matter whether you are in Texas or any other state, the fact remains the same that USDA home loans are one of the most borrower-centric mortgage options available to US citizens. Therefore, the next time you have a doubt about USDA loans, or about any other loan for that matter, get in touch with a specialty mortgage expert, rather than letting rumours guide your decision.


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