Nearly half the state of Arkansas falls within the USDA’s rural location guidelines which means there is substantial underdeveloped and vacant land with economic potential in the state. The USDA Rural Development home loan supports the industrialization of small, rural communities and promotes the development of new rural areas by assisting Arkansans with home purchases. Small communities across the state are struggling with rising taxes and depleting populations because many lower-income families can’t afford safe, permanent housing so they move to larger cities where they can obtain cheaper, temporary rental properties with little to no initial costs. The USDA Rural Development home loan makes it possible for these citizens to buy homes and strengthen and grow rural communities statewide.
The USDA Rural Development home loan is intended to give lower-income families a break by making it possible to purchase a home with no money down. To qualify for this loan, a borrower’s income must not exceed a certain amount based on location and household size. In Arkansas, the average per capita income is $22,007 which is below the national average. This means the majority of Arkansans fall within the income guidelines of the Rural Development home loan, especially those who already reside or work in rural areas where income is generally lower than in larger city populations. With the state’s sales tax and income tax higher than the national average, it is often difficult for Arkansans to save the necessary funds for the initial closing costs and fees that accompany the purchase of a new home. The USDA Rural Development home loan waives the need for a traditional down payment, so a homebuyer’s savings can be used for other necessities like utilities, furniture, and moving expenses. Normally, USDA allows the buyer’s closing costs to be covered by the seller as well, so a new home purchase can require no cash out of pocket.
The USDA Rural Development home loan has a fixed interest rate that is based on the current market rates. These nationally-monitored rates keep mortgage payments as low as possible, so regardless of the going mortgage rate in Arkansas, families on budgets can afford the best homes possible with their income through USDA. If the interest rate is lower in the future than when the home is originally purchased, USDA allows homeowners to refinance with lower rates and terms. The home must have been owned for 12 months before a refinance is possible. This option is great for homeowners that incur expenses they wish to pay down or home repairs they would like completed.