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USDA loan

Learn what a USDA loan is and how it works.
Discover the benefits of a USDA loan.
Find out the requirements to qualify for a USDA loan.

What is a USDA Loan?

USDA loans are mortgages backed by the U.S. Department of Agriculture. They are also a part of the USDA Rural Development Guaranteed Housing Loan program. This type of home loan is available to home buyers in rural, less-populated areas, with low-to-average incomes.

USDA Loan offers 100% financing with reduced mortgage insurance premiums and features below-market mortgage rates. With a USDA home mortgage, qualifiers could get low-interest rates and 0% down payment.

How USDA loans work

Using a USDA mortgage, buyers can finance all of the home's purchase price while getting mortgage rates better than the average. This happens because USDA mortgage rates are discounted. Furthermore, USDA loans are simple. The repayment schedule is standard, the closing costs are ordinary, and prepayment penalties never apply.

With a USDA loan, you don't need to pay a down payment. However, you are required to take a 15- or 30-year fixed-rate loan. Adjustable-rate mortgages are not available via the USDA rural mortgage program.

Rural loans can be used by both first-time buyers and repeat home buyers. Homeowner counseling is not required to use the USDA program.

What are the BENEFITS of a USDA LOAN?

If you're located in a rural area, the US Department of Agriculture (USDA) offers a home loan program that might be perfect for you. The goal of this program is to help families own a home by offering lower credit score requirements and zero-down payment options. USDA mortgage advantages include:
Low down payment
0% down payment or lower down payment than other loan options for rural areas.
Low PMI
Lower private mortgage insurance (PMI) than other loan programs.
Flexible qualification
More lenient qualifying requirements for borrowers with lower credit scores.

USDA LOAN QUALIFICATION REQUIREMENTS

USDA mortgage requirements are usually more flexible than conventional loan requirements. USDA loans are for home buyers with moderate income and smaller down payment capability. Here's what you need to qualify for a USDA loan:

USDA designated area

You must live in a place that fits the USDA's description of a rural area. This could include any area on the map with a population of at most 20,000 (in special cases a population of 35,000 is accepted). To see if the area where you live qualifies, visit this link.

USDA income limits

You must not exceed the maximum USDA income limits for your area. To be eligible, you can't make more than 15% above the local median salary.

Primary residence

You also need to use the house as your primary residence (no investment properties or vacation houses are allowed).

Ability to repay

Borrowers also have to meet USDA's "ability to repay" standards, including a steady job and income, proven by tax returns.

620 Credit score

Your credit score must be at least 620 points. If you don't have a credit score, your lender may accept an "alternate" tradeline to build a credit history.
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USDA MORTGAGE RATES VS FHA MORTGAGE RATES

USDA mortgage rates are usually the lowest possible rates among loan programs.
USDA rates are usually only matched by the VA mortgage rates, which are exclusively for veterans, military personnel, and their families. That is because the VA loan's government guarantee protects lenders against borrower default.
To get a low mortgage rate, you need low debts, a great credit score, and if possible a bigger down payment.
Both USDA and FHA programs allow a low down payment while requiring mortgage insurance.
USDA can be used with 0% down payment, but the house needs to be located in a qualified rural area, and the buyer's income must be under the local limits.
Although FHA requires a 3.5% down payment to qualify, you don't have income or location restrictions. FHA is also more lenient about credit scores (580 for FHA vs. 620 for USDA).
The right one for you would depend on where you're buying your house and your financial situation.

USDA LOAN FREQUENTLY ASKED QUESTIONS

To help you understand some of the terms and concepts that come with a home buying process, we've created a list of our clients' commonly asked questions regarding a USDA loan.

Is a USDA mortgage loan good?

Can I refinance my USDA mortgage to get lower mortgage rates?

What's the maximum USDA mortgage loan size?

Can I include the upfront mortgage insurance payment into my mortgage?

How much are the USDA mortgage loan closing costs?

I can't afford closing costs. Is it possible to receive a gift for my closing costs?

Is it allowed to have the seller pay my closing costs?

Can I use the USDA loan to buy a vacation house?

Can the USDA loan be used to buy an investment property?

Can I employ the USDA mortgage loan program in my working farm?

Can I employ the USDA mortgage loan on a new construction home?

Can I use the USDA loan program to make repairs and improvements to an existing home?

Can I employ the USDA loan to improve my house accessibility for persons with physical disabilities?

Can I make energy-efficiency improvements to a home with the USDA loans?

I recently went back to work. How long until I am USDA-eligible?

I am self-employed. Can I use the USDA loan program?

Can I refinance to get some extra cash with the USDA program?

If I am using the USDA mortgage program, do I have to escrow my taxes and insurance?

WOULD YOU LIKE TO QUALIFY FOR A USDA LOAN?

Are you getting frustrated because you don't know where to start?

JUST PROVIDE US WITH THE PROPER DOCUMENTATION

And OUR MORTGAGE BROKERS WILL DO THE HARD WORK FOR YOU

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WE WORK WITH THE MOST POPULAR MORTGAGE PACKAGES

Selecting the right mortgage loan is very important. As mortgage brokers we make sure you get the best deal available for your home loan.

Conventional Loan

No PMI required with a 20% down payment.
Can be used for a wide range of property types.
Higher loan limits than some government-backed programs.
Flexible loan terms with adjustable-rate and fixed-rate options.

VA Loan

100% financing available with full VA entitlement.
No private mortgage insurance required (PMI).
No prepayment penalty.
Guaranteed by the government.
Lenders have limitations.
Loans are assumable.

FHA Loan

Low minimum credit score of 500.
Government-insured Loan program.
Flexible qualification for first-time homebuyers.
3.5% down payment with a credit score of 580+.
Closing costs could be paid by the seller, home builder, or lender.

USDA Loan

0% down payment or lower down payment than other loan products.
Low private mortgage insurance (PMI).
Easier qualifying requirements for those with lower credit scores.
Can finance 100% of the home's purchase price.
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3638 W Cypress St
Tampa, FL 33607
(813) 284 - 4027
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Disclaimer: ​All data contained herein is for informational purposes only. While we make sure that all the information we provide is accurate, no guarantee is stated or implied. Any programs presented do not demonstrate all options or pricing structures. Rates, terms, programs, and underwriting policies may be modified without prior notice. Other restrictions may apply. This is not a proposal to extend credit or commitment to lend. Complaints may be directed to us by filling out the Complaints Form.
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