Zero-down, rural-region mortgages backed by the U.S. Department of Agriculture—ideal for homebuyers seeking affordable payments outside major metro areas.
Key Facts for 2025
| Down Payment | 0 % (100 % financing for eligible properties) |
| Upfront Guarantee Fee | 1.00 % of the loan amount (can be rolled into the loan) |
| Annual Fee | 0.35 % of the outstanding balance, paid monthly |
| Loan Limits | No published cap; borrower qualifies by income & DTI—property must meet USDA “Modest Housing” standards |
| Occupancy | Owner-occupied primary residence only |
| Credit Benchmarks | No USDA minimum, but most lenders require ≥ 620 FICO |
| Mortgage Insurance | USDA uses guarantee fees instead of PMI |
Why Choose a USDA Loan?
- $0 Down Payment – Preserve savings for moving costs, furnishings, or emergencies.
- Lower Monthly Costs – The 0.35 % annual fee is typically cheaper than conventional PMI.
- Competitive Fixed Rates – Rates often rival or beat conventional 30-year terms.
- Flexible Credit & DTI – Manual underwriting and 41 %–46 % DTI tolerances with compensating factors.
- 2–4 Unit Eligible (Site-Built) – Purchase select multi-unit homes if borrowers occupy one unit.
- Energy-Efficient Upgrades – Roll certain improvements into the loan without separate financing.
Program Variants
| USDA Product | Best For | Highlights |
|---|---|---|
| Guaranteed Loan (Section 502) | Moderate-income borrowers via approved lenders | 0 % down, 30-yr fixed, household income ≤ 115 % of area median |
| USDA Streamlined-Assist Refinance | Current USDA homeowners | No appraisal, no DTI calculation if payment falls ≥ $50/mo |
| Direct Loan (Section 502 Direct) | Low-income borrowers financed directly by USDA | Subsidized payment assistance; apply through local Rural Development office |
Eligibility Checklist
- Geographic Requirement
- Property must lie in a USDA-designated rural zone (many suburbs qualify).
- Use our ZIP-code search tool to confirm.
- Household Income
- Adjusted total household income ≤ 115 % of area median (varies by county, family size).
- Credit & Capacity
- 12-month housing history with no late payments preferred.
- Standard guideline: 29 % front-end / 41 % back-end DTI; may rise to 46 % with strong compensating factors.
- Property Standards
- Safe, sanitary, and modest in size—luxury features (swimming pools, etc.) generally disallowed.
How It Works with American Mortgage Network
- Quick Eligibility Check (5 min) – We confirm property address & household income.
- Pre-Approval – Soft credit pull option; generate a lender letter for real-estate agents.
- Offer & Contract – Negotiate with confidence knowing 100 % financing is in place.
- Appraisal & Underwriting – USDA-approved appraisal plus automated RD system submission.
- Final Commitment – Receive USDA Rural Development’s conditional guarantee.
- Closing & Keys – Sign remotely or in person; guarantee fee may be financed into the loan.
Average contract-to-close: 30–35 days (USDA review adds 3–7 business days after lender approval).
Frequently Asked Questions
Can I buy anywhere with a USDA loan?
No—homes must be within USDA-eligible rural zones. Many outer-ring suburbs qualify; check our map tool.
Are manufactured or modular homes allowed?
Yes—if they meet HUD standards and permanent-foundation rules, and are brand-new or move-in ready.
What are seller concessions?
Sellers can pay up to 6 % of the purchase price toward closing costs, which can allow true “zero-out-of-pocket” transactions.
Is there a first-time-buyer requirement?
No—any qualified borrower can use USDA, but you cannot own another adequate home in reasonable commuting distance.
Can I refinance my USDA loan?
Yes—Streamlined-Assist lets you lower monthly payments with no appraisal or DTI calculation when eligible.
Tools & Resources
- USDA Eligibility Map – Enter an address or ZIP to verify property eligibility.
- Income Calculator – Automatically adjusts for household size and county limits.
- Payment Estimator – See real PITI + guarantee fees.
- Loan Comparison Guide – USDA vs. FHA vs. Conventional low-down programs.
- Mortgage Glossary – Quick look-ups from “Guarantee Fee” to “Residual Income.”