Overview
USDA loans, backed by the US Department of Agriculture, offer zero down payment financing for eligible properties in rural and suburban areas. Despite the name, many suburban areas qualify — approximately 97% of US land mass is USDA-eligible. Income limits apply (typically 115% of area median income). USDA loans feature competitive rates and reduced mortgage insurance compared to FHA.
Min. Down
0%
Min. Credit
640
Term
30 yr
PMI
Yes*
Best For
- Rural and suburban homebuyers
- Low to moderate income buyers
- Buyers who want zero down payment
- First-time buyers in eligible areas
Pros
- No down payment required
- Below-market interest rates
- Lower mortgage insurance than FHA
- Seller can pay closing costs
- Flexible credit requirements
Cons
- Geographic restrictions (rural/suburban)
- Income limits apply (115% of AMI)
- Upfront guarantee fee (1%) and annual fee (0.35%)
- Only for primary residences
- Longer processing times
Requirements
- Property must be in USDA-eligible area
- Household income under 115% of area median
- Minimum 640 credit score (most lenders)
- Primary residence only
- US citizen or permanent resident
- Stable income history