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USDA Loans

A USDA Home Loan is a zero down payment mortgage for rural and suburban homebuyers. They are issued through the USDA loan program, by the United States Department of Agriculture.

There are three USDA home loan programs:

  • Loan guarantees: The USDA guarantees a mortgage, similar to an FHA or VA-backed loan. This lets you get a low-interest rate, even without a down payment.

  • Direct loans: Issued by the USDA, these mortgages are for low- and very low-income applicants.

  • Home improvement loans and grants: These loans permit homeowners to repair or upgrade their homes.

How USDA-issued home loans work

The USDA issues mortgages to applicants deemed to have the greatest need. That means an individual or family that:

  • Is without “decent, safe and sanitary housing”

  • Is unable to secure a home loan from a traditional lender

  • Their adjusted income is at or below the low-income limit for the area where they reside

 

The program generally issues direct loans for homes of 1,800 square feet or less, with a market value below the area loan limit. This will vary depending on where you live. Loan amounts can range from $100,000 to greater than $500,000 depending on the real estate values in the particular area.

Eligible home locations

  • Metropolitan areas are generally excluded

  • Rural locations are always eligible