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USDA Rural Development home loans came out from the shadows in 2009. What was once a little-known loan program is now an emerging powerhouse for thousands of prospective homeowners with moderate incomes and solid credit.

And that’s all the more reason why consumers considering a USDA home loan should act sooner rather than later in 2010.

In all, the USDA provided nearly 128,000 direct and guaranteed loans last year, about double the total for 2008. A good chunk of that increase was covered by funds from the American Recovery and Reinvestment Act.

USDA loans are usually tougher to qualify for than other government loans, but qualified borrowers can purchase homes in areas that meet the agency’s definition of “rural” without a down payment. Homeowners also don’t have to pay for private mortgage insurance.

Increased demand for these flexible loans put significant strain on the USDA’s 800 field offices, which, in turn, has triggered delays in agency approvals and closings for buyers nationwide, according to Real Estate Economy Watch.

At the same time, there’s currently no extra stimulus funding in the works for 2010. Real Estate Economy Watch’s Steve Cook expects the USDA to burn through most of its loan funding by the end of the first quarter.

If you’ve been considering a USDA loan or looking at homes that might meet the agency’s rural requirements, now’s the time to contact your local USDA field office. Prospective buyers can also check with their local office to determine whether a property meets the program’s requirements.

While the program targets more rural and open areas, there are exceptions that allow qualified borrowers to purchase homes in cities with fewer than 25,000 residents.

Image: ***j9***

About the Author

Chris Birk is a former journalist and author of “The Book on VA Loans: An Essential Guide to Maximizing Your Home Loan Benefits.” He is also content development director for Veterans United Home Loans. Follow him on Google+.

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