USDA Mortgages

USDA loans are mortgages backed the U.S. Department of Agriculture as part of its Rural Development Guaranteed Housing Loan program.

USDA eligibility is based on the buyer and the property.

USDA Mortgages

For a USDA mortgage, location is key. The USDA website can help determine if the property you are interested in falls within a USDA eligible area. Be sure the property is a condo, manufactured home, unit development, or single-family home.

While there are many benefits to enjoy, there are also fees involved, including an upfront mortgage insurance premium and an annual mortgage insurance fee. These fees are far less than what you'd pay in FHA mortgage insurance premiums, so it's a loan program that's definitely worth consideration.

Pros of USDA mortgages

  • No down payment

  • Flexible credit requirements

  • Competitive fixed interest rates

  • Low private mortgage insurance (PMI)

  • No maximum mortgage amount (amount is based on your income)

  • Finance 100% of home's appraised value


Cons of USDA mortgages

  • Geographic restrictions

  • Income limits

  • PMI is included

  • Single-family homes only


Who should get one? 

A USDA loan is a great option for buyers with moderate or low income. It lets you buy a house with nothing down and low mortgage rates — two huge benefits that only one other loan program (the VA loan) offers.

If your home is in an eligible area, it’s worth exploring a USDA-guaranteed loan. The main drawback is that USDA loans require mortgage insurance. So if you can make a 20% down payment, you might prefer a conventional loan with no mortgage insurance payment.