USDA Loans

USDA loans are government-backed mortgages designed to help low- to moderate-income buyers purchase homes in eligible rural and suburban areas. They offer significant benefits like 0 down payment requirements and competitive interest rates, but come with strict property location and household income limits. [1]

USDA loan keychain on cash background.

Key Features of USDA Loans

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    No Down Payment: Borrowers can finance up to 100% of the home's purchase price, eliminating the need to save for a large upfront down payment. [1, 2]

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    No Traditional PMI: Unlike conventional loans that require Private Mortgage Insurance, USDA loans require a 1% upfront guarantee fee and a small annual fee (0.35%) rolled into the monthly payment. [1, 2]

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    Credit Flexibility: While the USDA does not set a minimum credit score, most participating lenders typically require a score of 640 or higher. [1, 2]

Borrower and Property Eligibility

To qualify, you must meet criteria established by the U.S. Department of Agriculture (USDA): [1]

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    Location: The property must be located in an eligible rural or suburban area. You can search the USDA Eligibility Site to check if a specific address qualifies. [1, 2]

Illustration of borrower-related financial concepts.

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