What is the correct understanding of purchasing a vacation home using USDA financing?

The correct understanding of purchasing a vacation home using USDA financing is that only owner-occupied properties qualify. USDA loans are specifically designed to promote homeownership in rural areas, and they have strict guidelines that generally require the property to be the borrower's primary residence. This means that the borrower must occupy the home as their main living space.

USDA loan programs aim to assist low to moderate-income households in obtaining affordable housing, and allowing financing for vacation homes or investment properties would not align with this objective. The requirement for owner-occupancy ensures that the assistance goes to those who genuinely need stable living conditions rather than to investors or buyers of secondary homes. Therefore, properties intended solely for recreational use or as investment properties do not meet the criteria for USDA financing.