USDA Home Loan
A USDA home loan is a government-backed mortgage designed to help eligible low- and moderate-income borrowers purchase a primary residence in an approved rural or suburban area. Qualified buyers may receive 100% financing, which means no down payment is required. USDA guaranteed loans generally have a 30-year fixed interest rate and are obtained through an approved lender.
Frequently Asked Questions
Do USDA loans require a down payment?
Qualified borrowers may receive 100% financing with no down payment. Buyers may still need funds for closing costs unless those costs are covered through seller contributions, lender credits or another approved source.
Does the home have to be located on a farm?
No. The property must be in a USDA-eligible area, but many eligible locations include small towns, suburban communities and areas outside major cities. Eligibility can be checked using the USDA property eligibility map.
Are there income limits?
Yes. For the USDA Guaranteed Loan Program, household income generally cannot exceed 115% of the applicable area median household income. Limits vary based on the property’s location and household size.
Are USDA loans only for first-time homebuyers?
No. First-time and repeat homebuyers may qualify as long as they meet the program’s income, occupancy, property and underwriting requirements.
What credit score is required?
USDA does not establish one universal minimum credit score for the program. However, borrowers must demonstrate the willingness and ability to manage and repay their debts, and individual lenders may apply additional credit requirements.
Does a USDA loan require mortgage insurance?
USDA loans require an upfront guarantee fee and an ongoing annual fee, which is generally included in the monthly mortgage payment. These fees help support the loan guarantee program.
What types of properties are eligible?
Eligible properties may include certain detached homes, townhomes, condominiums, planned-unit developments, modular homes and manufactured homes. The property must meet program requirements and be used as the borrower’s primary residence.
Can I use a USDA loan to purchase an investment property or vacation home?
No. USDA financing is intended for a home that the borrower will personally occupy as their primary residence. Income-producing properties are generally not eligible.
Can closing costs be included in the loan?
Certain eligible closing costs and reasonable expenses may be included when the property’s appraised value supports the total financed amount. Seller contributions may also be permitted, subject to program and lender requirements.
Can I refinance with a USDA loan?
USDA refinance options are available for eligible homeowners who already have a USDA mortgage. The available program and qualification requirements will depend on the borrower’s circumstances.
How do I know whether I qualify?
Qualification depends on household income, property location, credit history, monthly debts, repayment ability and other lender requirements. A mortgage professional can check the property and income limits and help determine whether USDA financing is a good fit.