The United States Department of Agriculture (USDA) administers the program but does not directly lend money. Like loans backed by the Department of Veterans Affairs (VA) or the Federal Housing Administration (FHA), these loans are guaranteed by the USDA. Private lenders, such as banks or credit unions, provide the actual financing to the home buyer, with the assurance that the USDA will cover the loan if the borrower defaults.

This guarantee reduces the risk for lenders, making them more comfortable offering loans with lower down payment requirements.

Despite its name, the USDA loan is not limited to those in agricultural settings. It’s designed to help low and moderate-income households acquire adequate, modest, decent, safe, and sanitary dwellings as their primary residence in eligible rural areas.

To qualify for a USDA loan, applicants must meet specific income requirements and use the loan to purchase a home for their primary residence in an eligible area. Prospective homeowners can check a property’s eligibility by its address or consult with a lender about using a USDA loan. This loan can be applied to new homes, existing homes, and even those requiring renovations.

If a large down payment is a barrier to home ownership, the USDA loan could be the solution you need.

• You can purchase your home with as little as a 0% down payment.
• Available loan terms include 30-, 25-, 20-, and 15-year options with fixed rates.
• A 5-year adjustable rate mortgage option is also available.
• No monthly Private Mortgage Insurance (PMI) is required.
• USDA loans are governed by the U.S. Department of Agriculture.
• You can pay off your mortgage at any time without pre-payment penalties.

• Household income limits are in place and vary based on location.
• USDA loans are only available in certain areas. Consult with a specialist to determine if this option is available for you.
• You can buy a primary home with no money down.
• It’s possible to refinance up to 100% of your primary home’s value.