United States Department of Agriculture Loan

A USDA Loan also known as a Rural Development Loan is a mortgage program backed by the U.S. Department of Agriculture (USDA) that helps make homeownership more affordable in eligible rural and suburban areas.

Designed for low- to moderate-income borrowers, USDA loans offer 100% financing, meaning you can buy a home with no down payment, all while enjoying low interest rates and reduced mortgage insurance costs.

How a USDA Loan Works

USDA loans are issued by approved lenders and insured by the USDA. The program helps promote homeownership outside major metropolitan areas by offering affordable loan options to qualified buyers.

To qualify, both your income and the property location must meet USDA guidelines.

You can use a USDA loan to:

  • Buy a primary residence

  • Build, repair, or renovate an eligible home

  • Refinance an existing USDA mortgage

USDA loans typically come with 30-year fixed interest rates, making them predictable and budget-friendly.

Benefits of a USDA Loan

No Down Payment Required

Buy a home with 0% down, freeing up your savings for moving costs or other expenses.

Competitive Interest Rates

Because the loan is government-backed, USDA mortgage rates are often lower than conventional rates.

Reduced Mortgage Insurance

USDA loans require lower monthly mortgage insurance premiums than FHA loans, keeping payments more affordable.

Flexible Credit Guidelines

Easier credit requirements make homeownership attainable for more borrowers.

Roll Closing Costs into the Loan

In many cases, closing costs can be financed, reducing upfront expenses.

Things to Consider

  • Location Eligibility: The home must be in a USDA-approved rural or suburban area. Many smaller towns and growing communities qualify.

  • Income Limits: Your household income must fall within the USDA’s low-to-moderate income range for your area.

  • Primary Residence Only: The home must be owner-occupied; investment or vacation properties don’t qualify.

  • Upfront and Annual Fees: A small upfront guarantee fee and annual fee apply but are typically lower than FHA mortgage insurance costs.

Is a USDA Loan Right for You?

A USDA loan may be a great fit if you:

  • Want to buy a home with no down payment

  • Plan to live in a rural or suburban area

  • Have steady income within eligible limits

  • Prefer a low, fixed-rate mortgage