What Is USDA Loan?
USDA Loan: A zero-down mortgage backed by the U.S. Department of Agriculture for eligible rural and suburban areas.
Also called: USDA guaranteed loan, rural development loan
A USDA loan, through the USDA Single Family Housing Guaranteed Loan Program, offers 100% financing for homes in eligible rural and many suburban areas.
Key features
- No down payment
- Guarantee fee: 1% upfront (can be financed) and 0.35% annually, paid monthly
- Income limits: household income up to 115% of the area median
- Location: the home must be in an eligible area on USDA's map
- Occupancy: primary residence only
- Credit: about 640 for automated approval; lower scores may qualify with manual underwriting
How income is counted
USDA counts income from every adult in the household for eligibility, even people who aren't on the loan. Deductions for children, child care and elderly household members can help.
Good to know
After the lender approves the loan, USDA does its own final review, which can add a few days. Plan your closing date accordingly.