USDA Loan

A USDA mortgage, offered by the United States Department of Agriculture, is a home loan program for rural and eligible suburban homebuyers with low to moderate incomes.

Rather than issue loans, the VA instead pledges to repay about a quarter of every loan it guarantees in the unlikely event the borrower defaults. That guarantee gives VA-approved lenders greater protection when lending to military borrowers and often leads to highly competitive rates and terms for qualified veterans.

No Down Payment Required

One notable feature is the absence of a down payment requirement, making homeownership more accessible for those with limited financial resources.

Low-Interest Rates

USDA mortgages offer competitive and low-interest rates, contributing to the affordability of the loan for qualifying individuals and families.

Low Monthly Mortgage insurance

Types of USDA Loans for Eligible Borrowers



USDA Direct Loans (Single Family Housing Direct Loans):

• Designed for low-income and very-low-income borrowers purchasing qualified rural residences.
• Offers payment assistance through a subsidy to temporarily reduce mortgage payments.
• Borrowers have up to 33 years to repay, extendable to 38 years for very-low-income individuals.

USDA Guaranteed Loans (Single Family Housing Guaranteed Loan Program):

• Aids low- to moderate-income borrowers in buying decent, safe homes in eligible rural areas.
• Offered by approved lenders with the government guaranteeing 90% of the loan.
• No minimum credit score or down payment requirement.
• 30-year fixed-rate mortgages.

USDA Construction Loans:

• For low- to moderate-income borrowers building in eligible rural areas.
• Combines USDA guaranteed loan with a construction loan in a single construction-to-permanent loan.
• Covers various expenses, including lot purchase, inspection fees, and construction costs.
• Funds determined by the home's appraised value.

USDA Direct Loans vs. USDA Guaranteed Loans:

• Both target rural homebuyers, but direct loans involve subsidies, while guaranteed loans are offered by approved lenders.
• Eligibility requires properties in designated rural areas, meeting specific criteria for safety and sanitation.

USDA Loans vs. Conventional Loans:

• USDA loans and conventional loans have fixed interest rates and terms.
• USDA loans don't require a down payment, differing from conventional loans that typically require 3% down.
• FHA loans require a 3.5% down payment, while VA loans, like USDA loans, often don't require a down payment.

USDA Loan Eligibility Requirements

  • Property must be in a designated rural area with a population of 35,000 or less.
  • Borrowers must be U.S. citizens or qualified nonresidents.
  • Recommended minimum credit score of 640.
  • Maximum total DTI ratio of 41%.
  • Property must be a primary residence and meet specified criteria for safety and sanitation.

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