The Farmers Home Administration (FmHA) makes home loans available to moderate and low-income people. Some loans are made by FmHA itself. Others are guaranteed by this agency. The loans are available in “rural” areas that are not part of or associated with a city or large urbanized area.
The Farmers Home Administration (FmHA) is a little-known federal agency that gave loans to farmers and other borrowers who had difficulty obtaining traditional financing. You can still get a mortgage through the FmHA in its new iteration through the U.S. Department of Agriculture (USDA).
When it comes to mortgages, the FmHA encourages you to buy property in rural areas as a way to spur economic growth. Understanding the application requirements and loan restrictions will give you the best chance of qualifying for financing through the FmHA. FmHA loans are only available if you plan to purchase property in an area that has fewer than 25,000 people. You may mistakenly assume that this type of loan is only available to farmers who want to buy agricultural properties, but this is not the case. You can use an FmHA loan to purchase a primary residence, but you must meet several basic requirements.
- You must show you have a steady income
- You must demonstrate a positive credit history
- You must prove you have the ability to repay the loan, if granted
- Your income must be no more than 115 percent of the moderate income level for your area as determined by the U.S. Department of Housing and Urban Development (HUD). HUD determines the moderate income level by reviewing income data for the area and setting caps based on the number of people in your household.
The FmHA only gives funding to those who want to buy homes that it determines to be modest in cost, size and design.