The United States Department of Agriculture (USDA) has developed affordable USDA mortgage loan financing options for homeowners located in designated small towns, suburbs and exurbs. This program helps eligible low- to moderate-income families achieve homeownership by offering a no down payment option.
USDA mortgage loan options are often referred to as USDA/Rural Development Loans because their primary purpose is to encourage homeownership in rural areas, suburbs, and exurbs. Providing affordable homeownership opportunities in these areas promotes community development and improves quality of life.
These 30-year, fixed-rate mortgage loans are guaranteed by the U.S. Department of Agriculture (USDA), offering a zero-down-payment option for eligible borrowers. The loan term for a USDA loan is always 30 years.
Home loans guaranteed by the United States Department of Agriculture (USDA) provide affordable financing options for properties located in designated small towns, suburbs, and exurbs. This program helps eligible low- to moderate-income families achieve homeownership with no down payment requirement.
With flexible qualifying guidelines, USDA loans feature:
What homes qualify for a USDA mortgage loan?
Eligibility for a USDA mortgage is determined by property location, size, and condition. First, the property must be located in a USDA-designated rural area. The home must also serve as the borrower’s primary residence. Loan limits vary by state and county.
Who is eligible to receive a USDA mortgage loan?
Applicants must meet income eligibility criteria, generally capped at 115% of the area median household income (AMI) for the local state/county.
Applicants must be U.S. citizens, non-citizen nationals, or qualified aliens occupying the home as a primary residence. Households must demonstrate sufficient income to cover monthly mortgage payments, property taxes, homeowners insurance, and the annual USDA guarantee fee (paid partly at closing and partly monthly).
How do USDA loan costs compare to other mortgage options?
Outside of the zero-down-payment benefit, a major appeal of a USDA mortgage is its affordability. Because USDA loans carry government backing, lenders like Fairway can offer highly competitive monthly payment structures. Contact your Fairway mortgage advisor for a customized scenario breakdown.
Is there mortgage insurance with a USDA mortgage loan?
Instead of private mortgage insurance (PMI), USDA loans require a USDA “guarantee fee.” This includes an upfront fee (which can be financed into the loan) and an annual fee paid monthly alongside your mortgage payment.
Depending on your credit profile, the USDA guarantee fee structure may offer significant monthly cost advantages compared to conventional PMI.
Can you refinance a USDA mortgage loan?
Yes! USDA loans can be refinanced. Homeowners looking to lower monthly payments or adjust loan terms can refinance through traditional methods or utilize the USDA Streamline Refinance program, which simplifies processing by reducing documentation requirements for existing USDA borrowers.
Fairway is an approved USDA lender but is not affiliated with or acting on behalf of the U.S. Department of Agriculture or any government agency.
