Applicants must meet income limits, have acceptable credit, and buy a home in an eligible rural area.
No. USDA loans offer 100% financing.
Typically 640 or higher, though lower scores may be considered with strong compensating factors.
The U.S. Department of Agriculture (USDA) home loans program offers mortgages to low-income residents of rural areas who cannot otherwise obtain a conventional mortgage.
There are three USDA home loan programs:
USDA loans help make purchasing homes more affordable for those in qualifying rural areas. Though you'll still pay closing costs, if you're eligible, you'll likely get a lower interest rate and won't be required to make a down payment. You can do a preliminary check on the USDA eligibility site to see if the address of a home you're interested in and your income qualify. However, it's always best to let an expert help you understand your mortgage options.
The USDA offers three main programs:
Guaranteed Loans
Issued by approved local lenders, but backed by the USDA.
Designed for applicants with low to moderate income.
Offers no down payment and competitive interest rates.
Requires an upfront and annual mortgage insurance premium, similar to FHA loans.
Direct Loans
Funded directly by the USDA.
Targeted at low- and very low-income applicants.
Offers interest rates as low as 1% for qualifying borrowers.
Ideal for buyers in the most financially challenged areas who may not qualify for conventional loans.
Home Repair and Improvement Loans/Grants
Loans or grants allow homeowners to repair or upgrade their existing homes.
Can combine loans and grants to provide up to $27,500 in assistance.
Helps maintain the quality of rural housing and supports safe, livable homes.
No down payment required – perfect for buyers who lack savings for a traditional down payment.
Lower interest rates compared to conventional loans.
Flexible credit requirements – while a credit score of 640 or higher is ideal for guaranteed loans, lower scores may still qualify with compensating factors.
Reduced mortgage insurance costs – USDA insurance fees are typically lower than FHA mortgage insurance premiums.
Community development – encourages homeownership in rural areas, supporting local economies.
