Are USDA Rural Housing Loans Only for Wisconsin's "Rural" Properties?

I have had this question come up a lot lately and thought I would address it here on my blog. The short answer is of course no but it really depends on what you consider "rural". Today I will examine what the Wisconsin USDA Rural Housing program is all about.
First, let's differentiate between the two USDA Rural Housing programs.

Guaranteed Rural Housing Program

Direct Rural Housing Program

We will be discussing the Guaranteed program which is the only program lenders are able to offer. The direct program is for low to very low income applicants and are made directly through USDA. The Guaranteed program is for low to moderate income applicants and is processed through a lender or broker. You can go here to search county by county income limits for both programs.

Speaking of income limits, you can view a PDF file of the Wisconsin income limits but using the USDA Income Calculator to calculate income is more accurate because it is based on area income limit minus any deduction you can take to offset your income. The most common income deduction is child care expense.

For instance, if the income limit for the county you are looking at to purchase a Wisconsin property is $75,000/year and between, say, you and your wife you make $80,000/year. You also have one child who goes to daycare full time. We'll say daycare full time costs are $800/month. You can take the $9600/year daycare expense and subtract is from the $80,000 gross salary and come up with a net income of $70,400. Now your income qualifies for the program! Keep in mind too, that this income calculation is for program qualification only. The underwriter will use the full $80,000/year to determine if you qualify for the loan.

Now on to the real question at bay. Are Wisconsin USDA Rural Housing loans only for "rural" properties? Merriam-Webster defines rural as "of or relating to the country, country people or life, or agriculture". To me, this means that you literally would have to purchase a farm to meet this definition of rural. Unfortunately, for farmers, you cannot purchase a working farm with the Guaranteed program.

USDA has a less restrictive definition of rural which generally consists of communities that have 20,000 and under in population and are not a part of an urban area. For instance, here in Dane county, Madison and most of the communities surrounding Madison are not eligible. This list includes most of Sun Prairie, Fitchburg, parts of Waunakee, Middleton and Monona just to name a few. Communities such as Stoughton, Oregon, the rest of Waunakee, DeForest, most of Cottage Grove and most of Verona are eligible for the USDA guaranteed program.
There are two ways to determine community eligibility.

First, you can view this PDF which is a map of Wisconsin. The counties in white are 100% eligible. The counties shaded green have ineligible areas within the county, except for Milwaukee county which is 100% ineligible. So say you are looking for a property in Dane County and you want to know the area's that are eligible. Open up the PDF map of Wisconsin and click on Dane county. That is going to bring up another PDF map of just Dane County. The areas shaded in green on the county specific map are ineligible. You can zoom in on the map for a detailed look of the ineligible area.

Secondly, if you know the address of a property that you are interested in, you can go to Rural Housing's website HERE to determine if a specific address is eligible (click the accept button and then type in the address). If they system is unable to determine eligibility based on the address you entered, that doesn't mean it isn't eligible. It just means the system couldn't find the address, so it is unable to determine eligibility. At this point, you can either call/email us and we will help in determining if the property is eligible or search the address with MapQuest or Google maps to figure out where the address is and then go back to the Wisconsin PDF map, click the county the property is located and zoom in to find the street to determine eligibility. Sometimes it is just a matter of entering the correct format of the street to get the system to find the property (what I call HWY M in Evansville is really County Road M according to the system...).

In next weeks Wisconsin Rural Housing blog post I will discuss the other benefits and features of USDA Rural Housing Guaranteed program.

Your local Wisconsin mortgage banker:

Brian Collins
Toll Free:877-240-5810 x106
brian.collins@madisonmortgageguys.com
http://www.MadisonMortgageguys.com

Visit my blog at http://www.madisonmortgageguys.com/blogs_brian_collins/

Resources:
Wisconsin Rural Housing Program Page
Current Wisconsin USDA Rural Housing Mortgage Rates

Recent blog posts:
http://www.madisonmortgageguys.com/blogs_brian_collins/content/3-steps-to-prepare-for-your-wisconsin-or-illinois-home-purchase/

http://www.madisonmortgageguys.com/blogs_brian_collins/content/should-i-refinance-my-wisconsin-mortgage-mortgage-rates-are-still-low/

http://www.madisonmortgageguys.com/blogs_brian_collins/content/va-jumbo-loans-for-illinois-and-wisconsin-residents-ameristar-mortgage/

http://www.madisonmortgageguys.com/blogs_brian_collins/content/appleton-fha-loans-for-first-time-home-buyers-wisconsin/

http://www.madisonmortgageguys.com/blogs_brian_collins/content/are-usda-rural-housing-loans-only-for-wisconsins-rural-properties/