Everything You Need To Know About USDA Land Loans In Ohio

If you’re looking to buy vacant land or farmland in rural Ohio, USDA land loans can help make your dream a reality. As an Ohio resident myself, I’ve done extensive research on USDA’s land loan programs available here. In this comprehensive guide, I’ll walk through all the key details so you can determine if these loans are right for your needs.

What Are USDA Land Loans?

USDA land loans, also known as rural housing site loans, are a financing option specifically for purchasing vacant plots of land in eligible rural areas. There are two types offered:

• Section 523 loans – For buying land to build a home yourself through the USDA Self-Help program

• Section 524 loans – For purchasing land to build a home through any construction method

The USDA provides the funding for these loans to qualified applicants at below market interest rates. The land purchased can be for primary residences, vacation properties, or even farmland. These loans help increase affordable rural housing.

USDA Land Loan Benefits

There are many advantages unique to USDA land loans:

• Low fixed interest rates – Currently around 3% for Section 523 and 1% for Section 524 loans

• Low down payments – Typically 0% to 5% down required

• Long repayment terms – Up to 33 years for repayment

• No prepayment penalties – Allows you to pay off early with no fees

• Flexible credit guidelines – Credit score requirements are more lenient

For many borrowers, these benefits make USDA land loans one of the most affordable financing options out there. The ability to buy land with little money down is a huge perk.

Am I Eligible For A USDA Land Loan In Ohio?

To qualify for a USDA land loan in Ohio, there are a few basic eligibility requirements:

• The land you wish to purchase must be located in a USDA-designated rural area. You can check your address to confirm.

• You must be unable to secure traditional credit to buy the property. USDA is a lender of last resort.

• Your household income must be below the limit for your county, typically 115% of the median.

• You must prove repayment ability based on your debts, income, and credit history.

• The loans are available to U.S. citizens, certain permanent residents, and non-permanent residents meeting requirements.

If you meet these criteria, you’ll have a good chance of getting approved! USDA land loans are an excellent option for low-income borrowers.

How Do I Apply For A USDA Land Loan In Ohio?

Here is a quick rundown of the USDA land loan application process:

• Find a property – The land must meet USDA location and quality standards.

• Check income eligibility – Use USDA’s income and property eligibility tool.

• Get pre-qualified – Work with a USDA approved lender to get pre-qualified.

• Make an offer – If pre-qualified, you can move forward with an offer.

• Submit loan application – Work with lender to complete full application.

• Home inspection – USDA will inspect the property.

• Loan closing – Finally, close on your loan!

It’s wise to consult a real estate agent familiar with USDA loans. They can help navigate the process smoothly.

How Much Can I Borrow With A USDA Land Loan?

The maximum loan amount you can borrow depends on a few factors:

• County loan limit – Each county has a maximum limit, typically around $150K.

• Repayment ability – How much you can afford to repay based on your income.

• Appraised value – The appraisal value of the land itself.

• Downpayment – How much you put down also impacts loan amount.

Actual loan limits vary greatly by case. A USDA lender can give you an estimate of what you may qualify for after assessing your specific financial situation.

What Are The Repayment Options On USDA Land Loans?

USDA land loans offer quite flexible repayment terms:

• Loan maturity up to 33 years

• Fixed interest rate for life of loan

• Monthly installments amortized over repayment term

• No penalties for repaying loan early

The longer repayment period helps keep payments affordable. And the ability to pay off the loan faster can save money on interest.

Can The Land I Purchase With A USDA Loan Have A House?

For Section 523 Self-Help loans, the land must be vacant as it is to build your own home.

However, Section 524 loans allow purchasing land with an existing home, provided it meets USDA requirements. The home must be for your own primary residence and be decent, safe, and sanitary.

So yes, in some cases your USDA land loan can finance property with an existing house!

Where In Ohio Are USDA Land Loans Available?

USDA land loans are only available for purchasing property in eligible rural areas. Luckily, much of Ohio qualifies!

Generally, rural towns and counties not near larger metro areas are eligible. For example, cities like Cleveland and Columbus are not covered.

To check if a specific property address is in a USDA rural zone, use the USDA eligibility tool. You can also work with an approved lender who can advise if a property qualifies.

Can I Use A USDA Land Loan For A Mobile Home in Ohio?

Yes, USDA land loans can be used to purchase land to place a mobile or manufactured home on. The home must be for your full-time residence and meet all USDA housing guidelines.

You can purchase existing land with a mobile home using a Section 524 loan. Or buy vacant land to place a new mobile home on using either loan.

Just be sure to work with a USDA approved lender familiar with financing manufactured housing. Not every lender handles these types of properties.

Are USDA Land Loans A Good Option?

At the end of the day, USDA land loans provide an excellent financing solution for rural properties at very favorable terms.

The benefits of low rates, low down payments, flexible credit requirements, and long repayment periods are hard to beat.

For low-to-moderate income buyers unable to obtain conventional financing, these loans can make homeownership achievable.

While the program is limited to rural areas, it serves as a viable option for purchasing vacant land and farms throughout much of Ohio.

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