What is a USDA Loan? USDA loans are guaranteed by the United States Department of Agriculture. These loans (also known as Rural Development loans) are designed to help low-to-moderate income consumers purchase homes in rural areas. USDA loans often don’t require a down payment and provide up to 100% for a home purchase or refinance (rate and term only if existing home is insured by USDA.
Approved USDA loan lenders typically require a minimum credit score of at least 640 to get a USDA home loan. However, like VA Loans, the USDA doesn’t have a minimum credit score requirement, so borrowers with credit scores below 640 may still be eligible for a USDA-backed mortgage.
We’re here to make getting a USDA Loan easier with our technology, tools, expertise, that will guide you along the way. We’ll help you clearly understand the differences between loan programs and options, empowering you to make the best informed decisions on what is right for you. Use our Mortgage Calculators to estimate monthly payments and more.
The United States Department of Agriculture, or USDA, is usually associated with things like the food pyramid, food safety, and plant inspections. But did you know the USDA is also involved in rural development?
The USDA believes that helping families in rural areas become homeowners creates strong communities and a better quality of life. It does this through its Single-Family Housing Guaranteed Loan Program for low to moderate income families.
The United States Department of Agriculture (USDA) gives borrowers the opportunity to own a home outside of the city limits. There are several benefits of a USDA loan, including flexible credit underwriting requirements and no down payment required.
The USDA requires an upfront guarantee fee, which is usually added to the initial loan amount or paid at closing. The upfront USDA guarantee fee in 2023 is 1% of the loan amount. So if the base loan is for $500,000, the total loan after the fee added on would be $505,000.
Additionally, there is an annual fee that divided and paid as part of your monthly mortgage payment until the loan is paid in full and acts like mortgage insurance. The annual fee for 2023 is 0.35% of the loan amount.
Making sure you qualify for a USDA loan should be your first step before applying, but you may also want to consider the different types of USDA loans available. These include a USDA guaranteed loan and a USDA direct loan.
Here’s a breakdown of each:
You must also choose to live in the home as your primary residence and live in a qualified rural area. Lenders may establish lender-specific requirements other than those put in place by the USDA’s Rural Development program.
The USDA is committed to the development of Rural America. Eligible applicants may purchase, build, rehabilitate, improve or relocate a dwelling in an eligible rural area with 100% financing. You must be a U.S. Citizen, or have legal permanent resident state as a U.S. non-citizen national, or Qualified Alien and agree to occupy the home as your primary residence.
USDA loans are low-interest mortgages with zero down payments designed for low-income households who demonstrate economic need, so your adjusted gross income can’t be more than 115% of the median income in that particular area.
To qualify for a USDA loan you must buy a home in a USDA designated rural area, but you can often find eligible properties just on the edge of suburban areas too.
You can verify your USDA Income Eligibility, to review Income Limits, and USDA Loan Basics to see if you qualify or just contact us and we can do it for you.
To check if a house is in a USDA Loan eligible area visit the USDA Property Eligibility Zone Map.
You can enter a specific address for determination or just search the map to review general eligible areas.
Select the “Single-Family Housing Guaranteed” option, then select Property Eligibility below. After you accept the disclaimer, just type in the house address.
* Some qualifications, terms and conditions apply. Inquire for more details.
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