USDA Direct Loans (also known as USDA Section 502 Direct Loans) are a mortgage program that assists low- and very-low income individuals buy decent, safe, and clean housing in rural areas. This is done through payment assistance which increases a borrower’s ability to repay. That payment assistance can be best described a subsidy which lowers the mortgage payment for short periods. The amount of assistance largely depends on the adjusted family income. USDA Direct Home Loans in California don’t work in the same manner as USDA Guaranteed Loans in California. The USDA Guaranteed Loan Program is a more popular option and can be used for a wider range of applicant incomes.California USDA Direct Loans are 100% financing mortgages. Unlike Guaranteed USDA Loans, applicants must have low or very low income to qualify for Direct Loans.
California USDA Direct Loan Requirements
USDA Direct Loans are a mortgage program available for low-income individuals to buy homes in rural areas. USDA defines low- or very low income as anything between 50% and 80% of the Area Median (AMI). The statewide median income was recently reported as $75,235 in California, but this number may differ from one county to the next. For home buyers that meet those requirements, USDA Loans are a zero-down mortgage, meaning there’s no down payment. To be eligible, applicants must also meet the following requirements:
- You don’t presently have decent, clean, sanitary and safe housing.
- You can’t get another mortgage from a different source with terms and conditions reasonably expected to be met.
- The subject property must be your primary residence.
- You must be legally eligible for a mortgage.
- You must meet citizenship requirements or non-citizen requirements.
- You must be eligible for participation in federal programs.
In addition, the subject property must meet the following requirements.
- It must be moderately-sized for the area.
- The home cause can’t exceed the area’s applicable loan limit.
- The home can’t be designed for the production of income.
How much can I borrow with a USDA Direct Mortgage?
Up to the maximum loan limit, the amount of money that an applicant’s eligible for depends on their ability to pay it back. When evaluating home loan applicants for Direct home loans, Rural Development considers income, assets, debt, and payment assistance. And remember, you can’t borrow more than the local USDA loan limit for the county where the home is located, no matter what your repayment ability may be.
What areas in CA are eligible for USDA Direct Loans?
The subject property must be in an approved rural area. You can search specific addresses in California for USDA eligibility here.
Are there other zero down mortgage options or low down payment mortgages in California?
Yes, other low down payment mortgage options, and no down payment mortgage options are available in California besides USDA Direct Loans. You can start by looking into USDA Guaranteed Loans in California, FHA Loan in California, or if you’re a veteran or qualified family member, VA Loans in California. You may also want to research if any helpful California down payment assistance programs may be available.
Direct Loans aren’t as popular as USDA Guaranteed Loans, which accommodate a wider range of borrower qualifications. The USDA sets specific maximum mortgage limits for Direct Loans in California. Search home loan limits for your area below.
California USDA Direct Loan Limits
Direct Loan Limit
|San Luis Obispo||$533,600|
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