The growth of the suburbs might eliminate a government no-down-payment loan option in some areas of Virginia, pricing some buyers out of those markets.

With all the hubbub about Fannie Mae, Freddie Mac, and the FHA, one zero-down-payment government loan option hasn’t got much attention: USDA loans. The Department of Agriculture will guarantee a 30-year loan with no down payment for rural buyers with “reasonable credit.” It’s called the USDA Rural Development Single Family Housing Guaranteed Loan Program.

Here’s the catch: The point of the program was to get people to move to rural areas. Every 10 years, when it finishes parsing the US Census data, USDA tweaks its maps of what’s rural and what isn’t.

The latest changes are set to take effect in October. Here are the parts of Virginia with areas that will no longer be eligible for the USDA loans:

  • Cave Springs
  • Centreville
  • Chester
  • Chester CDP
  • Christiansburg town
  • City of Fredericksburg
  • City of Front Royal
  • City of Radford
  • Great Falls
  • Hollins
  • Huntington
  • Lincolnia
  • Madison Heights
  • Short Pump
  • Timberlake
  • Vinton
  • Waynesboro city

It makes sense for areas that are no longer rural to no longer be classified as rural, of course. Suburbs can grow, and farmland can be paved for growth. But really, USDA? Now? Don’t you think the timing could be just a bit better — maybe wait to implement the changes till the recovery is a bit further along?


Click here to see if a particular property is eligible for a USDA loan.