I didn't know about it either. Yes, the US Department of Agriculture has a program, instituted back in the 1940s, to assist in rural development, that has become extremely popular during these days of crunching credit. These are USDA-backed loans, so approved lenders can offer no-money down.
Check out its growth:
- FY 2006 $3.07 billion 31,131 guarantees
- FY 2007 $3.64 billion 35,322 guarantees
- FY 2008 $6.98 billion 63,933 guarantees
- FY 2009 $16.2 billion 133,043 guarantees
Yes, the housing development has to be in a city or municipality that has a population of 20 thousand or less. If that community is close enough to an urban area that it's part of a metropolitan statistical area, then it doesn't qualify. Still, this includes a lot of areas you might not expect.