The USDA Rural Development Loan is not JUST for First-Time Home Buyers
When most people think of Rural Development loans (also known as USDA loans), they often assume they’re a good option for first-time homebuyers purchasing properties in remote or agricultural areas. However, they’re actually a good option for ANYONE who is looking in the communities that are eligible. We want to squash the mindset that you can’t use an RD loan if you aren’t a first time homebuyer.
First, a bit of background info: A Rural Development loan is a zero-down payment mortgage backed by the U.S. Department of Agriculture (USDA) that’s designed to help buyers purchase homes in eligible rural and suburban areas. And here’s the best part: they apply in more areas than you might think—including cities and suburbs across Iowa.
If you haven’t looked into a Rural Development loan recently, now’s the perfect time to give it another look. Whether you’re a first-time buyer or not, this loan option has unique benefits that make it a smart choice for many homebuyers. Let’s explore why!
Open to Any Buyer Who Qualifies
Why do so many people assume Rural Development loans are only for first-time buyers? It’s likely because they’re designed for primary residences, which leads some repeat buyers to mistakenly believe they no longer qualify. In reality, eligibility depends on current living circumstances—not whether you’ve owned a home before.
However, you can be a repeat buyer and still qualify, as long as you meet income and property eligibility guidelines along with credit guidelines.
This option does not offer a solution for buyers with poor credit, but the interest rate is still competitive even with a credit score down to 640. The interest rate is also typically LOWER than Conventional financing!
This opens the door for move-up buyers, people relocating from other states, and even those downsizing.
No Down Payment Required
Another reason there’s a misconception about how RD loans are better for first-time buyers probably comes from the fact that there is no down payment required. While that does make them a great option for first time home buyers, it also helps any buyers who can then save their down payment for other projects or purchases down the line.
Everyone can benefit from having no down payment! It’s money back in your pockets.
You Might Be Surprised Which Areas Qualify
While the term “rural” might suggest farmland or wide-open spaces, USDA-eligible areas often include suburban communities and smaller cities, including many growing parts of Iowa.
In fact, RD loans can be used in popular counties like Johnson, Linn, Benton, Cedar, and Polk. These are all places where families are putting down roots thanks to good schools, expanding job markets, proximity to events, and strong community ties.
2025 Income Limits Have Increased—So More Buyers Qualify
The USDA adjusts income limits annually, and the 2025 update has expanded eligibility for many Iowa counties. This means more households now fall under the allowable income threshold, making it easier than ever to qualify in areas like Johnson, Linn, Benton, Cedar, and Polk Counties.
Takeaways
Rural Development loans offer a combination of affordability, flexibility, and accessibility. They may be a great fit if:
- You’re looking for a low- or no-down-payment option
- You want to live in a qualifying area
- You meet the income and credit requirements, even if you’re not a first-time buyer
We’re here to help you explore every option available, including programs like Rural Development loans that may open the door to homeownership, even if it’s sometimes in places and situations you might not expect.
Let’s talk. We’ll help you find out if your income, location, and goals align with the USDA loan! We’re here to walk you through every step in the process.