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Contour Mortgage offers USDA loans, enabling lower-income borrowers to afford a place they can call ‘home.’

A USDA loan is a type of mortgage designed for low- to moderate-income borrowers in rural areas. It offers low interest rates and affordable mortgage insurance, with no down payment.

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Officially referred to as the “USDA 502 Guaranteed Rural Housing Loan Program,” the USDA Home Loan Program is guaranteed by the U.S. Department of Agriculture and was developed with low-income families and individuals in mind. It’s often considered an ideal mortgage for first-time home buyers who are having trouble getting approved for a conventional loan, but it can also be utilized by borrowers who have owned a home before, but again, are facing difficulties with obtaining other mortgages.

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USDA loans are different from others, including conventional loans, VA (Veterans Affairs) loans, and FHA (Federal Housing Administration) loans, due to their unique benefits and location requirements.



Also referred to as USDA Rural Development Loans, USDA loans offer many advantages that others don’t.

Flexible Qualifications

The requirements for borrower eligibility tend to be more lenient than those associated with other mortgage loans. Consequently, borrowers will have a much easier time obtaining such financial assistance.

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No Down Payment 

For example, the USDA Home Loan Program is one of the only home loan programs left in the country that doesn’t require money down on the purchase of a home. This could be essential for buyers who can’t afford to save up thousands and thousands of dollars needed for a costly down payment.

Forgiving Credit Criteria 

There isn’t a set credit range applicants must fall under to qualify for a USDA loan. While credit history is important, as mortgage lenders will want to review and assess an applicant’s ability to pay back the loan on time, it isn’t as much of a determining factor as it is for other mortgage financing options.

Low Interest Rates 

This type of financial assistance also tends to offer lower interest rates, which can help save home buyers money over the life of the loan.

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mortgage pmi

Affordable Private Mortgage Insurance 

Mortgage insurance is tied to the principal balance. Premiums decrease as the loan balance decreases. However, USDA loans don’t have private mortgage insurance (PMI) requirements, and thus, the costs associated with them are lower than other mortgage loans.

No Cash to Close

Closing costs can be paid through gifting, covered by the seller as part of a negotiated deal, or may even be able to be financed as part of the loan amount.

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To be eligible for a USDA loan, there are certain requirements that must be met.

For instance, because the USDA Home Loan Program was designed to help moderate- to low-income families and individuals secure a mortgage, there are designed income limits that vary for each USDA qualified area. These income limits are generally 115 percent of the average median income for that area. Borrowers must also be U.S. citizens, or legally permitted to be in the United States.

The home needs to be located in a rural area, as well. Fortunately, around 97 percent of the United States is designated rural for purposes of the loan, so many properties do qualify. Borrowers are often surprised when they discover that in many cases USDA rural areas can be suburbs on the outskirts of larger cities, or small towns with less than 25,000 residents.

As aforementioned, credit history doesn’t play as much of a role in the approval process as it does for other mortgage financing options, but the stronger the credit score, the better. Having a healthy credit score is always a plus, whether applying for a USDA loan or any other type of loan, mortgage, or otherwise.

Lastly, USDA loans can only be used to help borrowers purchase a property that will be used as their primary residence. Applicants interested in buying an investment property or vacation home, for instance, would not qualify.

Those who would like to apply for a USDA loan are encouraged to contact us to learn more about the advantages, and how to get pre-approved.

Many of our knowledgeable mortgage loan originators specialize in helping borrowers qualify for USDA loans, and can answer any questions applicants may have about the requirements and approval process.

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