USDA Loan Guide

USDA loans are guaranteed by the U.S. Department of Agriculture to support homeownership in eligible rural and some suburban areas. Despite the name, many eligible areas are more suburban than most people expect, and eligibility is based on a property location map maintained by the USDA.

Who It Tends to Fit

USDA loans fit moderate-income buyers purchasing in an eligible area who want to avoid a large down payment, provided their household income falls within the program's limits.

Key Features

• No down payment required for eligible borrowers and properties
• Household income limits apply and vary by location and household size
• The property must be located within a USDA-eligible area
• Includes an upfront and annual guarantee fee, generally lower than FHA mortgage insurance

General Qualifying Factors

• Household income at or below the applicable USDA limit for the area and household size
• A property located within a USDA-designated eligible area, confirmed via the USDA's eligibility map
• Acceptable credit history and debt-to-income ratio per USDA and lender guidelines
• The home must be the borrower's primary residence

Exact requirements vary by lender and can change over time, so treat the figures above as general starting points rather than guarantees. A licensed loan officer can confirm current guidelines for a specific program.

Costs to Expect

USDA loans generally require no down payment, but include an upfront guarantee fee (often financed into the loan) and a smaller annual fee included in the monthly payment, along with standard closing costs.

Also Worth Knowing

Because eligibility depends on both household income and the specific property's location, it's worth checking a given address against the current USDA eligibility map before assuming a property qualifies.