A USDA loan, through the U.S. Department of Agriculture's Single Family Housing program, helps buyers in eligible rural and some suburban areas buy a home they'll live in. For buyers who qualify, it can finance the full price, so you may need no down payment. Your household income has to be within USDA's limit for the area, and the home has to be in an eligible location. USDA loans are 30-year fixed-rate loans and include an upfront fee and an annual fee set by USDA.
USDA loans are one of the best-kept secrets in home lending. A lot of people assume "rural" means a farm at the end of a dirt road. In reality, many small towns and some areas on the edge of bigger cities qualify.
If you're buying a home to live in, and it's outside a big city, it's worth five minutes to check.
USDA loans fit low- to moderate-income buyers who are buying a primary home in a USDA-eligible area. That often includes:
If you have plenty saved and strong credit, a conventional loan may cost less over time. If you're a veteran, compare a VA loan too. We'll lay them side by side.
USDA's Rural Development office runs the Single Family Housing loan program for lenders. A USDA-approved lender makes the loan, and USDA backs a large share of it. That backing is what lets lenders offer 100 percent financing to buyers who meet the program's rules.
The loan is a 30-year fixed-rate mortgage. Your principal and interest payment stays the same for the life of the loan.
The home has to be in an area USDA considers eligible. You can check an address on USDA's eligibility website, which has a map and a search by address.
A few things to know:
USDA loans are meant for low- and moderate-income households. Your household income can't be more than USDA's limit for the area, which is set at 115 percent of the area median household income. The limits vary by county and by household size.
Here's where people get tripped up: USDA looks at two kinds of income.
USDA also allows some deductions from household income, for things like dependents, an elderly household member, and childcare costs. That can make the difference for a family that's close to the limit.
USDA wants the home to be modest, decent, safe, and sanitary. It can't be used mainly to produce income, like a working farm or a business.
Eligible homes include single-family detached homes, attached homes, condos, PUDs, modular homes, and manufactured homes that meet USDA's rules. Manufactured homes have extra requirements, so ask before you shop.
The appraiser checks both value and condition. If repairs are needed, they may have to be done before closing.
USDA loans have two fees set by USDA:
USDA can change these fees, so your loan officer will show the current figures on your Loan Estimate.
You'll also have the usual closing costs: appraisal, title, escrow or settlement, recording, and prepaid property taxes and insurance. USDA allows loan funds to cover closing costs in some cases, and sellers can often pay part of them.
Your monthly payment includes principal and interest, the USDA annual fee, and usually property taxes and homeowners insurance held in escrow.
You receive a Loan Estimate that lists your costs before you commit.
If you're eligible for more than one, we'll compare the payment, the fees, and the cash you need for each.
For buyers who meet the program's rules, USDA loans can finance the full price. You may still need money for some closing costs, unless the seller or the loan covers them.
Check the address on USDA's eligibility website, or ask your loan officer to check it for you.
They're set by county and household size, at 115 percent of the area median household income. Your loan officer can look up the current limit for your county.
No. USDA loans are only for a primary residence you'll live in.
USDA doesn't set a maximum price, but your income and the home's value limit how much you can borrow, and the home should be modest.
USDA refinancing is limited to borrowers who already have a USDA loan. See Refinance for other options.
Yes. USDA loans are available through our lenders in every state where we're licensed. What decides it is the property: the home has to be in a USDA-eligible area, and your household income has to fit the county limit. Ask your loan officer to check the address.
Rates depend on your credit, the lender, and the day your loan is priced. Get a personalized rate quote.
If the home you have in mind is outside a big city, it's worth checking. See your buying power, book a call, or call us at 530-888-6000, and we'll check the address and the income limit with you. See Buy a Home for the full buying process.
