In 1949, the U.S. Department of Agriculture started the rural housing program guaranteeing no-money-down mortgages to help lower-income Americans living in rural areas.

However, this rural program eventually expanded to places that are not so rural: Los Angeles; Washington, D.C.; Austin, Texas; Seattle, Wa.; and Tampa, Fla., according to Reuters. 

According to the 2000 U.S. Census definition of urban, the USDA guaranteed at least 51,600 mortgages for people who lived in urban areas, the article said.

A spokesperson for the USDA addressed the issue, noting that lending in some urban areas is allowed under the USDA’s own definition of rural, which differs from the Census Bureau’s and is based in part on rules established by Congress.

Rural housing program breaks city limits | HousingWire.

 Congress doesn’t act by the March 27 reauthorization deadline, the 2010 Census will automatically kick in, disqualifying more than 900 communities that have been protected since the 1980s and that represent 40 percent of the program’s current loans, according to a study by the National Rural Housing Coalition.

In late February, Rep. Jeff Fortenberry, a Nebraska Republican, introduced a bill that would keep the current program alive for another 10 years. Meanwhile, the Senate’s continuing resolution to keep the government funded past March 27 contains language that would extend the program as is until at least September 30.

Brian Johns has a simple solution. Last year, the product support manager for a multinational technology company got a USDA-guaranteed, no-money-down loan to buy a $290,000 house for his family of four just a five-minute walk from Baby Beach, on lush Kauai, one island over from Oahu.

The money that would have gone toward a down payment paid for a fresh coat of paint on the house, new floors and top-shelf appliances. Whether the home he bought with a USDA Rural Housing Guaranteed Loan is in a rural or urban area doesn’t matter to him.

“I think they should just change the name so folks don’t get hung up on it. Call it the USDA loan,” he says. “Thanks, USDA. Appreciate it.”