The U.S. Department of Agriculture (USDA) home loans program offers mortgages to low-income residents of rural areas who cannot otherwise obtain a conventional mortgage.

If you live in a rural area and can't qualify for a conventional loan, you may be eligible for either a USDA guaranteed loan or a USDA direct loan. The home loans program is designed to help lower-income people living in unhealthy or unsafe rural conditions obtain a home with modern utilities and adequate space.

There are three USDA home loan programs:

• Loan guarantees: The USDA ensures a mortgage issued by a participating local lender — similar to an FHA loan and VA-backed loans — permitting you to get low mortgage interest rates, even without a down payment. If you put little or no money down, you will have to pay an insurance premium.
• Direct loans: Issued by the USDA, these mortgages are for low- and very low-income applicants. Income thresholds differ by region. With subsidies, interest rates can be as low as 1%.
• Home improvement loans and grants: These loans allow homeowners to repair or improve their homes. Packages can also merge a loan and a grant, providing up to $27,500 in aid.

USDA loans help make purchasing homes more affordable for those in qualifying rural areas. Though you'll still pay closing costs, if you're eligible, you'll likely get a lower interest rate and won't be required to make a down payment. You can do a preliminary check on the USDA eligibility site to see if the address of a home you're interested in and your income qualify. However, it's always best to let an expert help you understand your mortgage options.