Are USDA loans only for farms?

No. USDA loans are for residential properties in eligible rural and suburban areas — most homes outside major metro centers qualify. Use the USDA eligibility map to check a specific address.

What's the income limit for a USDA loan?

Household income must be at or below 115% of the area median income, adjusted for household size. The exact limit varies by county and is updated annually.

Can I buy a fixer-upper with a USDA loan?

USDA loans require the property to be safe, sanitary, and structurally sound at closing. Major renovations should be handled through a USDA renovation loan or a different program like the FHA 203(k).

How does USDA mortgage insurance compare to FHA?

USDA's 0.35% annual fee is significantly cheaper than FHA's 0.55%. Over a 30-year loan, this saves thousands of dollars.

government loan

USDA Loans

USDA loans are backed by the U.S. Department of Agriculture and offer 100% financing for low- to moderate-income buyers in eligible rural and suburban areas.

Down payment: 0%
Credit score: 640 (most lenders)
Loan amount: No fixed maximum; capped by your debt-to-income and the area's income limits
MI: Upfront guarantee fee of 1% rolled into loan + annual fee of 0.35% (much cheaper than FHA MIP)

Best for

Buyers in eligible rural or suburban areas
Low- to moderate-income households (115% of area median income or less)
First-time and repeat buyers with no down payment savings
Borrowers with steady income but limited assets

Eligibility

Property must be in a USDA-eligible area (use the USDA's online eligibility map)
Household income at or below 115% of the area median income
Credit score typically 640+ (some lenders go lower with manual underwriting)
Property must be the primary residence
U.S. citizenship or permanent residency
Home must meet USDA appraisal standards

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The upside

Zero down payment required
Lower mortgage insurance costs than FHA
Competitive interest rates
More suburban areas qualify than people realize
Closing costs can be financed if appraisal supports it

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Worth considering

Strict geographic eligibility limits where you can buy
Household income caps disqualify higher earners
Only for primary residences
USDA appraisal can flag property condition issues

Documents you'll need

Two most recent pay stubs
Two years of W-2s and tax returns
Two months of bank statements
Photo ID and Social Security card
Documentation of all household income (including non-borrowing adults)

Is the USDA loan a hidden gem?

For eligible borrowers in eligible areas, USDA financing is often the best deal in the entire mortgage market, even better than FHA on monthly cost. The biggest barrier is awareness; many buyers assume they don’t qualify because they don’t picture themselves as “rural.”

Before you write off USDA, check the eligibility map. Many small towns and outer suburbs of major metros qualify, and the savings versus FHA over 30 years can be substantial.

Common questions

Are USDA loans only for farms?: No. USDA loans are for residential properties in eligible rural and suburban areas — most homes outside major metro centers qualify. Use the USDA eligibility map to check a specific address.
What's the income limit for a USDA loan?: Household income must be at or below 115% of the area median income, adjusted for household size. The exact limit varies by county and is updated annually.
Can I buy a fixer-upper with a USDA loan?: USDA loans require the property to be safe, sanitary, and structurally sound at closing. Major renovations should be handled through a USDA renovation loan or a different program like the FHA 203(k).
How does USDA mortgage insurance compare to FHA?: USDA's 0.35% annual fee is significantly cheaper than FHA's 0.55%. Over a 30-year loan, this saves thousands of dollars.