A USDA loan is a zero-down-payment mortgage for a home that must be in a rural area (USDA defines a rural area as area that has a population under 35,000). USDA loans are guaranteed by the United States Department of Agriculture and they help very low-to-moderate income buyers become homeowners. 

The three major benefits of a USDA loan are:  

  • Attractive rates – USDA loan rates are comparable to conventional loan rates and may at times be lower than the rates on Conventional loans.
  • No down payment required: most USDA borrowers do not need to make a down payment. However, they may be required to make a $1,000 investment at closing. This $1,000 can be used for earnest money or any applicable closing costs.
  • No Private Mortgage Insurance (PMI) is required. – With a USDA loan, a Borrower is only required to pay a 1% upfront fee. This fee can be paid in cash or be financed and included into the monthly mortgage payment. Additionally, the monthly mortgage payment will include a small USDA annual fee of 0.35% of the loan amount.

In order to qualify for a USDA loan – a Borrower does not have to be a first-time homebuyer or be employed in the agricultural industry. Only US citizens and permanent residents qualify for a USDA loan.

Certain minimum credit score requirements 

To be eligible for a USDA loan, you’ll need to meet three basic income criteria.

  • Your family income typically must be low or very low, as defined by the USDA. You may still be eligible if you have a moderate family income
  • Your family income meets the parameters necessary for your level of debt
  • Your source of income is dependable

You are required to maintain an escrow account with your lender. The lender will use this account to pay the taxes and insurance on your loan.

To be eligible for a USDA loan, your property must meet certain requirements.

  • It must be your primary residence
  • It has to be located in a rural area, which the USDA defines as having a population under 35,000. Please click on the map attached for eligibility:
  • Income-producing (Investment) properties and vacation homes do not qualify for USDA loans
  • The property has to be appraised by a USDA-appraiser.

Eligibility (

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