For a comparison of all major mortgage types — conventional, FHA, VA, USDA, ARM, and jumbo — see the Mortgage Loan Types hub.
USDA loans are one of the only true zero-down-payment mortgages available. If you’re buying in an eligible area, this program can save you thousands compared to FHA or conventional financing.
USDA Loan Basics
| Feature | Details |
|---|---|
| Down payment | $0 |
| Mortgage insurance | 1% upfront + 0.35% annual |
| Min. credit score (USDA guideline) | 640 for automatic approval |
| Min. credit score (manual underwriting) | 580-639 possible with manual review |
| Income limit | USDA moderate income limit for your county and household size |
| Property location | Must be in USDA-eligible area |
| Property type | Primary residence only |
| Loan term | 30 years (fixed rate only) |
| Seller concessions | Up to 6% of sale price |
USDA vs. FHA vs. VA vs. Conventional
| Feature | USDA | FHA | VA | Conventional |
|---|---|---|---|---|
| Down payment | 0% | 3.5% | 0% | 3-5% |
| Upfront fee | 1.0% | 1.75% | 2.15% | None |
| Annual MI/MIP | 0.35% | 0.55% | None | 0.3-1.5% (PMI) |
| MI duration | Life of loan | Life of loan (< 10% down) | N/A | Until 78-80% LTV |
| Income limits | Yes (USDA moderate income limit) | No | No | No |
| Location restriction | USDA-eligible areas | None | None | None |
| Credit score | 640 (auto) | 580 | 620 (lender) | 620 |
| Property types | Primary only | Primary only | Primary only | Primary, second, investment |
Monthly Payment Comparison: $250,000 Home
| Cost | USDA (0% Down) | FHA (3.5% Down) | Conventional (5% Down) |
|---|---|---|---|
| Down payment | $0 | $8,750 | $12,500 |
| Loan amount | $250,000 | $241,250 | $237,500 |
| Upfront fee (financed) | $2,500 | $4,222 | $0 |
| Total loan | $252,500 | $245,472 | $237,500 |
| Rate | 7.13% | 7.13% | 7.40% |
| P&I | $1,702 | $1,655 | $1,644 |
| Annual MI (monthly) | $74 | $111 | $99 |
| Total monthly | $1,776 | $1,765 | $1,743 |
| Cash needed at closing | $3,000-$6,000 | $14,750-$18,750 | $18,500-$22,500 |
Rates: FHA and USDA at Mortgage News Daily’s 30-year FHA index (7.13%, October 14, 2026; no survey we use publishes a USDA average, so the FHA figure stands in for illustration), conventional at the Freddie Mac 30-year average (7.40%, week of October 8, 2026). Conventional PMI assumed at 0.5% of the loan a year.
USDA requires the least cash out of pocket despite similar monthly payments.
USDA Income Limits (2026)
USDA sets a moderate income limit for each county and household size. The regulation (7 CFR 3555.10) defines it as the greater of 115 percent of the U.S. median family income, the average of the state-wide and state non-metro median family income, or 115/80ths of the area low-income limit adjusted for household size. This page does not list dollar limits because they vary by county and household size and USDA updates them; look up your own on the USDA eligibility website.
What Counts as “Household Income”
| Counts | Doesn’t Count |
|---|---|
| Borrower’s employment income | Income from minors (under 18) |
| Co-borrower’s income | Foster child income |
| Any adult household member’s income (18+) | Live-in aide income |
| Part-time and seasonal income | Certain disability payments |
| Overtime, bonuses, commissions | |
| Social Security, pensions | |
| Child support/alimony received | |
| Rental income |
Important: All adult household members’ income counts toward the limit—not just the people on the loan. A married couple where one spouse earns $70,000 and the other earns $45,000 would count $115,000 toward the limit, before any adjustments.
USDA Eligible Areas
What Qualifies
| Eligible | Not Eligible |
|---|---|
| Towns under 35,000 population | Cities over 35,000 (generally) |
| Suburban areas outside metro centers | Dense urban areas |
| Rural communities | Some high-growth suburbs recently removed |
| Many areas within 30-60 min of a city | Core metro areas |
Surprising Places That Are USDA-Eligible
Many buyers don’t realize suburban communities near these major cities qualify:
| Near This City | Eligible Areas Found | Distance from City Center |
|---|---|---|
| Austin, TX | Surrounding suburbs and small towns | 15-30 miles |
| Nashville, TN | Counties east and south of the city | 20-40 miles |
| Raleigh, NC | Eastern and southern suburbs | 15-25 miles |
| Denver, CO | Eastern plains communities | 20-40 miles |
| Portland, OR | Southern and eastern communities | 15-35 miles |
| San Antonio, TX | Northern and western suburbs | 15-30 miles |
Check the USDA eligibility map: eligibility.sc.egov.usda.gov/eligibility
USDA Guarantee Fee (Mortgage Insurance)
Upfront Guarantee Fee
| Loan Amount | Upfront Fee (1.0%) | If Financed Into Loan |
|---|---|---|
| $150,000 | $1,500 | New loan: $151,500 |
| $200,000 | $2,000 | New loan: $202,000 |
| $250,000 | $2,500 | New loan: $252,500 |
| $300,000 | $3,000 | New loan: $303,000 |
Annual Fee (Monthly Cost)
| Loan Amount | Annual Fee (0.35%) | Monthly Cost |
|---|---|---|
| $150,000 | $525 | $44 |
| $200,000 | $700 | $58 |
| $250,000 | $875 | $73 |
| $300,000 | $1,050 | $88 |
USDA’s annual fee (0.35%) is significantly lower than FHA’s (0.55%).
USDA Loan Process
| Step | Action | Timeline |
|---|---|---|
| 1 | Check property eligibility on USDA map | Instant (online) |
| 2 | Check household income against limits | Instant (online) |
| 3 | Get pre-approved with a USDA-approved lender | 1-3 days |
| 4 | Find an eligible home and make an offer | Varies |
| 5 | Standard appraisal (similar to FHA) | 5-10 days |
| 6 | Lender underwriting | 1-2 weeks |
| 7 | USDA approval (after lender approval) | 1-3 weeks additional |
| 8 | Closing | 45-60 days total |
USDA loans take longer to close than conventional or FHA because they require a second approval from the USDA office after the lender approves.
USDA Property Requirements
| Requirement | Details |
|---|---|
| Location | Must be in USDA-eligible area |
| Occupancy | Primary residence only (no investment or vacation) |
| Size | Must be modest for the area (no luxury homes) |
| Condition | Must be move-in ready (no major repairs) |
| Income-producing features | No working farms or income-producing land |
| Pool | Existing pool is fine; appraisal must note it |
| Acreage | Typically under 10 acres; larger parcels evaluated case-by-case |
| Manufactured homes | Allowed if on permanent foundation |
| Condos | Allowed in approved communities |
| New construction | Allowed |
Who Should Get a USDA Loan
| USDA Is Best For | Why |
|---|---|
| Buyers with no down payment savings | True 0% financing |
| Moderate-income buyers in suburban/rural areas | Income limits are set by county and household size; check yours |
| Borrowers who want the lowest mortgage insurance | 0.35% annual vs. 0.55% FHA |
| Buyers in smaller towns and commuter communities | Many suburbs qualify |
USDA Might Not Be Best If
| Situation | Better Option |
|---|---|
| Property is in a city (not USDA-eligible) | FHA or conventional |
| Household income exceeds the USDA limit for your county | Conventional loan |
| You want to buy a second home or rental | Conventional loan |
| Need to close quickly (under 45 days) | Conventional or FHA |
| Veteran with VA eligibility | VA loan (also 0% down, no MI at all) |
The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy