A USDA Mortgage (United States Department of Agriculture) offers loan programs that have NO down payment. The USDA does not originate nor service loans, instead the USDA sets the guidelines for loan qualifications and guarantees the loan. USDA Loans have Geographic Eligibility areas. Not all counties are eligible for USDA Loan program. Check the eligibility map.
Key Characteristics USDA Mortgage Loans Includes:
- Down Payment: There is NO down payment required if the homebuyer qualifies.
- Credit Requirement: The credit requirement is more strict than FHA or VA. You must have a certain amount of credit history, credit score, and credit accounts.
- Income to Debt Ratios: USDA loans have a more strict guideline when it comes to how much home you can afford compared to FHA or VA.
- Private Mortgage Insurance: USDA loans have a Funding Fee that is rolled into the loan and a monthly funding fee that is lower than FHA. It remains with the life of the loan.
- Loan Limits: USDA does not have a loan limit, but it has a household income limit. All income that is earned by ALL people living in the house regardless if they are on the loan or not, has to be included. Household income limits vary per county and the number of household members.
USDA Loans offers the option of NO down payment provided you meet the other loan criteria guidelines. USDA is a popular option for those homebuyers living in the eligible areas with an established credit history, needing 100% financing. Borrowers should carefully compare their options, including interest rates, loan terms, and costs before choosing a USDA mortgage or exploring other financial alternatives.
