USDA Home Loans

A USDA home loan is a special type of mortgage backed by the US Department of Agriculture. These mortgages are part of the USDA's Rural Development Guaranteed Housing Loan Program. With great interest rates and no down payment necessary, USDA loans make homeownership more affordable to people in rural areas who might not qualify for conventional mortgage loans.

USDA home loans offer a unique financing option when conventional mortgages aren't an option. There are three types of USDA loans.

• Guaranteed loans are backed by the USDA, issued by approved lenders and typically require no down payment.
• Direct loans are funded directly by and obtained directly through the USDA. They offer lower interest rates and may require no down payment.
• Home improvement loans provide funds for repairs or upgrades to existing homes. These low-interest, fixed-rate loans can be used to make homes more livable or efficient.

Get started by getting prequalified for a USDA mortgage online or by calling us at 888-280-2885. You can also search our local directory to find a mortgage banker near you. Once you're prequalified, you can apply for a USDA rural development loan and turn your dream of buying a rural or suburban home into a reality.

To qualify for a USDA home loan, the house you're purchasing must be in an eligible rural area and your income must be below the eligibility cap for that area. Lenders will also consider your debt-to-income ratio, or DTI, and your credit score. Preferred borrowers will typically have a DTI under 43% and a credit score of 640 or higher.

USDA loans differ from conventional mortgages in their eligibility and insurance requirements, as well as their geographic availability. Unlike most conventional mortgage loans, USDA home loans also don't require a down payment. They do require mortgage insurance, but it differs from private mortgage insurance, or PMI, because it's capped at 1% of your loan amount and can be rolled into your loan. There's also an annual premium that's divided by 12 and added to your monthly payment.

No. Homes purchased with USDA loans must be your primary residence, not a vacation or investment property. However, this doesn't mean you have to be a first-time homebuyer. Repeat buyers can also qualify for this unique mortgage program.

No. USDA rural development loans are generally meant for purchasing existing or new homes. They're not typically available for purchasing land unless they're part of a new construction plan that meets USDA standards.

Yes. The USDA offers streamlined and non-streamlined options that may allow borrowers to lower their interest rate or monthly payment without needing an appraisal in some cases. The streamlined option is faster and has fewer requirements for those who qualify.

You can also choose to refinance your USDA mortgage through a conventional refinance process, although this may result in the loss of certain benefits.

Income limits for USDA loans vary based on location and household size. Limits are adjusted according to an area's median income. You can check the income limit for your area through USDA loan requirements and eligibility guidelines.