What is a USDA Home Loan?

Administered by the United States Department of Agriculture (USDA), the USDA Home Loan program provides loan guarantees rather than directly lending money. Similar to VA and FHA loans, USDA loans are backed by the USDA, which means that private lenders—such as banks or credit unions—provide the funds but are assured repayment by the USDA if the borrower defaults. This guarantee allows lenders to offer loans with less stringent down payment requirements.

Who Can Use the USDA Program?

Despite its name, the USDA loan is not limited to agricultural settings. The program is designed to assist low and moderate-income households in obtaining safe, decent, and sanitary homes as their primary residence in eligible rural areas. Applicants must meet income requirements and purchase a home for personal use in an approved location. Potential homeowners can verify property eligibility or consult with a lender about using a USDA loan in their area. The loan can be applied to new homes, existing homes, and homes requiring renovations.

If a significant down payment is a barrier to homeownership, the USDA loan could be the solution you need.

How USDA Loans Work

- Available in 30-, 25-, 20-, and 15-year fixed-rate terms.

- 5-year adjustable-rate mortgages are also available.

- No monthly Private Mortgage Insurance (PMI) required.

- Governed by the U.S. Department of Agriculture.

- Pay off your mortgage anytime without pre-payment penalties.

- 620 min fico score with debt ratio restrictions of 41%

-Income must be at or below 80% of the AMI for your county.

Qualification Requirements

- Household income limits apply and vary by location.

- Available only in certain areas. Consult with a specialist to determine if it’s an option for you.

- Buy a home with no money down (for a primary residence).

- Refinance up to 100% of your primary home’s value.

Have Questions?

Give us a call! One of our mortgage specialists would be happy to answer all your questions.