Also written as:
USDA
A government-backed mortgage for buyers in eligible rural and suburban areas. No down payment required, with income limits based on area median income.
USDA loans, administered by the U.S. Department of Agriculture's Rural Development program, were designed to encourage homeownership outside major metro areas. Despite the "rural" name, plenty of suburban and small-town locations qualify — the USDA maintains an eligibility map you can check by address.
The big appeal: 0% down payment. There's no monthly mortgage insurance like FHA charges, but USDA does charge a small upfront guarantee fee (1% of the loan amount) and an annual fee (0.35% of the balance). You also have to meet income limits — usually 115% of the area's median household income.
USDA loans are an underused tool for buyers who qualify by location and income.
Example
A buyer in a USDA-eligible area with a household income under the local limit can buy a $300,000 home with 0% down. They pay a 1% guarantee fee ($3,000 rolled into the loan) and an annual fee of about $87/month.
Also known as
USDA mortgage, rural development loan, RD loan
Source:
USDA Rural Development