Rural America encompasses vast tracts of land, inhabited by a relatively small share of the nation’s population, but its role in the U.S. housing market is growing more consequential.
As affordability pressures, remote work, and lifestyle shifts push buyers beyond metropolitan cores, demand in rural communities is rising, even as the financing challenges unique to those markets remain acute.
According to the U.S. Census Bureau, roughly 97% of America’s landmass is classified as rural, yet fewer than 20% of Americans—about 66 to 67 million people—live there. That imbalance creates both opportunity and friction: while rural markets often offer lower entry prices and space unavailable in cities, they also face limited housing stock, fewer lenders, and underwriting constraints that conventional mortgage channels are not always equipped to address.
Recent data underscores that shift.
Realtor.com reports that rural counties have experienced home price growth that has far outpaced many urban centers. From November 2019 to November 2025, median listing prices in rural areas rose more than 70%, compared with just over 30% in metro counties, reversing decades-long trends of population and investment flowing mostly toward cities.
As rural housing demand accelerates, federal housing finance programs are increasingly serving as both stabilizers and enablers of homeownership. For many borrowers, that support begins with the U.S. Department of Agriculture, whose Rural Housing Service provides zero-down mortgage options tailored to low- and moderate-income buyers in eligible communities. But sustaining rural homeownership at scale also requires liquidity beyond origination. This is where Farmer Mac plays a critical, and often less visible, role by supporting lenders and expanding access to credit across agricultural and rural housing markets.
Together, USDA and Farmer Mac form a framework that underpins rural housing finance, ranging from helping individual families purchase homes to ensuring lenders have the capital and flexibility needed to serve America’s least dense markets. To better understand how these programs function in today’s high-rate, high-cost environment, MortgagePoint spoke with representatives from both agencies about demand trends, affordability challenges, and the future of rural homeownership.
USDA: The Front Door to Rural Homeownership
To buy their homes, many rural Americans rely on programs from the U.S. Department of Agriculture.
The USDA loan program traces its history to the New Deal’s Bankhead-Jones Farm Tenant Act of 1937, which sought to help tenant farmers buy farms. It evolved greatly with the Housing Act of 1949 to provide affordable rural housing after World War II.
It expanded beyond farmers to encompass all low-to-moderate-income rural Americans. Now, it is administered by the Rural Housing Service (RHS) to create thriving rural communities by offering 100% financing for homes in eligible areas.
The Housing Act of 1949 made it a national goal for decent housing for all Americans and led to Title V. That authorized USDA loans and grants for farmers and rural residents to build or repair homes and established the foundation for the modern housing program.
Throughout the years, the agencies evolved and eventually restructured into the USDA’s Rural Development (RD) mission area, with housing programs now under the Rural Housing Service (RHS).
Here are the agency’s key program types:
- Direct Loans: These are for very low- to low-income applicants, often with grants for health/safety improvements.
- Guaranteed Loans: Backed by the federal government but funded by private lenders, these loans enable low-to-moderate-income families in eligible rural areas to get 100% financing with no down payment.
MortgagePoint asked the USDA to explain how it helps rural residents attain the dream of homeownership.
Q: Why is the USDA Rural Mortgage Loans program so important to American homebuyers?
Well-built, affordable housing is essential to the vitality of communities in Rural America. Rural Development’s Housing Programs provide financing for families and individuals buying, building, or repairing affordable houses in Rural America.
USDA Rural Development has two main programs to support rural housing:
Single-Family Housing Guaranteed Loan Program
Through the Single-Family Guaranteed Loan Program (SFHGLP), low- and moderate-income borrowers work with approved lenders to purchase a home. The program provides a 90% loan note guarantee to approved lenders to reduce the risk of extending 100% loans to eligible rural homebuyers, which means there is no down payment requirement for those who qualify.
Single-Family Housing Direct Program
Through the Single-Family Housing Direct Loan Program (SFHDLP), USDA offers fixed-interest mortgage loans to low- and very low-income people who cannot get loans elsewhere. Funds may be used to purchase, build, renovate, or repair a home. Applicants may be eligible for 100% financing, and loans are for
up to 33 years. Interest rates are below market and determined so that a family pays 22–26% of their income for principal, interest, taxes, and insurance.
In some cases, applicants may qualify for payment assistance—a temporary subsidy—to help increase their repayment ability.
Q: How many Americans could benefit from the program?
Millions of Americans live in Rural America, and many meet the requirements of our housing programs. A number of factors are considered when determining an applicant’s eligibility. Each program we offer has different requirements. All our rural housing loan programs have income limits for the area where they wish to buy a house, and they must be willing and able to repay debt.
Q: How has demand for USDA loans shifted over the past 12–24 months, especially in the current high-rate environment?
The USDA Rural Development’s Single-Family Housing Guaranteed Loan Program portfolio has $106 billion in outstanding loan balances serving over 850,000 homes in Rural America.
For many years, USDA Rural Development has had more applicants for the Single-Family Housing Direct Program than it has funds to distribute, and this year is no different. As the average price for a modest home skyrocketed between 2020 and 2024, our funding was more quickly exhausted. We continue to accept applications; however, currently there is a one- to two-year wait for the program.
Alternatively, we encourage borrowers to finance with the Single-Family Housing Guaranteed Loan Program. More details about this program can be found at rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program.
Q: Do you see more first-time homebuyers turning to USDA as other affordability pathways narrow?
More than 90% of our borrowers are first-time homebuyers.
Q: Which rural markets today are showing the strongest and weakest homeownership trends, and why?
The rural markets showing the strongest growth are Louisiana, Puerto Rico, and Guam. The rural markets with slowing trends are Missouri, North Carolina, and Michigan.
Q: What demographic or migration trends are influencing rural lending demand right now?
Our programs are available in all 50 states and U.S. territories. The Guaranteed Loan Program is administered at the national level; however, the Direct Loan Program is administered at the state level. Local staff are available at our local office to help answer any housing questions. You can find a local office near you here.
Q: How does the USDA Rural Mortgage Loans program differ from conventional home borrowing and from FHA loans?
There are several differences between our programs and conventional or FHA programs. Rural housing loan programs promote homeownership specifically for Rural America. We also have different eligibility requirements and income limits. We offer 0% down payments and lower guaranteed fees (Guaranteed program) and payment assistance (Direct program).
Q: Do today’s definitions of “rural” still make sense, given modern commuting patterns and remote work trends?
Rural areas are determined by law and reviewed every five years. For USDA’s single-family housing, communities are generally under 20,000 (with some exceptions that allow communities to be grandfathered up to 35,000). Rural America faces unique challenges, including the lack of adequate housing, access to affordable credit, and availability of housing-related services (such as appraisers, contractors, etc.), often because homes are infrequently built in these more remote areas. USDA has been making strides in digital modernization.
What improvements have lenders felt on the ground? The Single-Family Housing Guaranteed Loan Program is the only federal housing program with a full-service automated underwriting system known as the Guaranteed Underwriting System (GUS).
Q: How effective is USDA’s zero-down structure in addressing today’s affordability crisis?
The USDA Rural Development zero-down structure for the Guaranteed Loan Program is very effective. It is the only federal loan program for 100% financing of rural properties, making it a premier option for Rural Americans.
Q: What role do you believe USDA loans play in helping borrowers build generational wealth in rural areas?
Rural Development loans offer a pathway to homeownership for those who may not otherwise have access to it. Decent, affordable housing helps stabilize Rural America’s housing stock, and homeownership helps promote generational wealth-building through home equity for rural borrowers.
Q: Are current income limits and eligibility requirements aligned with the real affordability challenges rural families face?
Guaranteed Loan Program borrowers must meet our income-eligibility requirements and cannot exceed 115% of the median household income. Income limits are set by Congressional statute, and Rural Development is required to follow them.
Q: What should policymakers understand about the unique economics of building in rural America?
Rural America faces many unique housing challenges, including a lack of builders in these remote areas and increased transportation costs for building materials, both of which can increase the cost of building new homes in rural areas.
