Shutdown Stalling Rural Mortgages

Zillow Research
Zillow
  • The USDA backs about 120,000 mortgages a year, or about 3.5 percent of purchase mortgage originations nationally.

  • Almost half of USDA mortgages were in southern states from 2012 to 2017.[1]

Borrowers who rely on mortgages from the U.S. Department of Agriculture (USDA) have been in a holding pattern that runs alongside the federal government shutdown. These loans from the USDA's Farm Service Agency and the Rural Housing Service are made mostly in rural areas and often to low- and middle-income borrowers.

The USDA backs about 120,000 mortgages a year, or about 3.5 percent of all mortgage purchase originations,[2] according to data from the Home Mortgage Disclosure Act. The USDA offices that administer these loans have been closed since late December, rendering a major source of funding inaccessible.

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In eight states, USDA home loans accounted for more than 10 percent of all home loans between 2012 and 2017. Delaware and Maine led the list. Five of the eight states are southern – and southern states overall account for 47 percent of all USDA mortgage originations. In rural parts of Tennessee, one in five home loans was backed by the USDA. Southern powerhouse Atlanta led major metro areas in USDA mortgages, with an average of 1,670 loans per year between 2012 and 2017.

Only 2.1 percent of mortgage borrowers in western states used USDA loans. While the rate was high across Wyoming and in other large, less urbanized western states, California's rate was a very low 0.9 percent, greatly lowering the average. Borrowers in California from 2012 to 2017 actually took out the highest number of rural housing loans in the region, but overall mortgage borrowing in the state's large, dense cities was so great that it obscured the high numbers of USDA mortgages in rural areas and smaller metros like El Centro, Calif. and Redding, Calif.

[1] The most recent year for which data are available.

[2] All figures refer to purchase originations only, excluding remodeling and refinancing.

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