What type of loan is guaranteed by the USDA to promote living in rural areas?

The loan guaranteed by the USDA to promote living in rural areas is specifically known as the Rural Housing Service Loan, often referred to as a USDA loan. These loans are designed to support homeownership in designated rural areas, which are defined as having a population of less than 35,000 residents. The aim of this loan program is to encourage homeownership and ensure that individuals and families can buy homes without the burden of high down payments, which is particularly beneficial in less densely populated regions.

USDA loans come with various advantages, including competitive interest rates and the possibility of zero down payment, making them an attractive option for eligible borrowers with limited financial resources. In contrast, conventional loans, FHA loans, and VA loans cater to different types of borrowers and have different eligibility requirements or benefits. Conventional loans typically have higher down payment requirements and are not backed by a government entity. FHA loans are designed for lower-income borrowers but are not specific to rural area residents. VA loans are exclusively for veterans and active-duty military personnel, catering to a completely different demographic. Thus, the designation of the USDA loan as the Rural Housing Service Loan specifically emphasizes its goal of enhancing homeownership opportunities in rural settings.