Texas Real Estate Sales Agent ExamFinancingMedium
A borrower is seeking to purchase a property in a designated rural area and has a moderate income. They are informed that they may qualify for a loan that does not require a down payment and is backed by the U.S. government. Which government loan program is MOST likely being referred to?
- AVA loan
- BFHA loan
- CConventional loan
- DUSDA loan
Show answer & explanationAnswer & explanation
Correct answer: D. USDA loan
USDA (U.S. Department of Agriculture) loans are designed for low-to-moderate income borrowers in eligible rural areas and uniquely offer 100% financing (no down payment) among government-backed options for non-veterans.
Why the other options are wrong
- A. VA loans offer 100% financing but are exclusively for eligible veterans, which is not specified for this borrower.
- B. FHA loans require a down payment, typically 3.5%.
- C. Conventional loans are not government-backed and typically require a down payment.
USDA Loan Benefits
USDA loans are government-backed mortgages for eligible low-to-moderate income borrowers purchasing homes in designated rural areas, often requiring no down payment.
- 0% down payment for qualified borrowers
- Specific income limits apply
- Property must be in an eligible rural area
Memory trick: USDA helps Rural Underprivileged Developers Acquire.