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Loan Requirements for USDA Mortgages

Qualifying for a specialty mortgage like a USDA loan requires certain details. See if you qualify for a USDA loan here.

USDA loans are backed by the U.S. Department of Agriculture as part of its USDA Rural Development Guaranteed Housing Loan program and provide 100% financing for eligible borrowers. Focused on boosting rural communities, USDA loans are available to low-to-moderate-income home buyers who are purchasing a home in a USDA-eligible area.

To be eligible for a USDA home loan, you must meet certain criteria. Here's what’s required to qualify and what to expect with a USDA loan.


Location Eligibility

USDA-eligible properties must be in rural areas, but the good news is that the USDA’s definition of rural is much broader than what most people imagine. The USDA defines a rural area as one with a population of less than 10,000 or a population of less than 35,000 and a serious lack of mortgage credit. Approximately 97% of land in the United States qualifies for a USDA home loan, including some suburban areas surprising close to the city limits. To see if your property is eligible, use the USDA’s eligibility site.

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Income Limits

USDA loans are for families with low-to-moderate income, and home buyers must meet income requirements based on the property area to be eligible. To qualify, the home buyer's household income must not exceed 115% of the median income for that geographic region. Additionally, borrowers must be able to show proof of a stable income and a credit history that shows they can repay the loan.

Residency Requirements

You must be a U.S. citizen, non-citizen national or qualified alien.

Credit Score Requirements

Most lenders require a minimum credit score of at least 640 to qualify for a USDA home loan. Lenders want to be sure that your credit history shows that you will be able to pay back your loan. Talk to your lender if you have questions about your credit score.

Property Requirements

The property you are purchasing must serve as your primary residence. USDA home loans cannot be used for investment properties, including farms, rental homes, and vacation homes.

Minimum Down Payment

USDA loans, along with VA loans, are one of the few loans that require no down payment. USDA home loans are guaranteed by the U.S. government, which means if you were to default on your payment, the USDA would cover your lender's loss. The decreased risk allows banks and mortgage companies to offer low interest rates and require zero down payment.

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Mortgage Insurance

Although borrowers are not required to make a down payment, they must pay a 1% guarantee fee that can be rolled into closing costs. Additionally, USDA home loans include a 0.35% annual mortgage insurance (MI) fee that is divided by 12 and paid monthly.

Here's an example: A home buyer who purchases a $100,000 home with nothing down would pay a $1,000 mortgage insurance premium as part of their closing costs, plus a monthly mortgage insurance payment of $29.17.

Start Your USDA Loan

Getting your loan journey started is as easy as reaching out to a loan officer. A licensed member of our team will be happy to help you navigate this path.

Find a USDA Loan Officer