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USDA Home Loan Frequently Asked Questions

Basic USDA Loan Information

What is a USDA Rural Home Loan?

The United States Department of Agriculture partners with approved local lenders to offer 100 percent financing to eligible borrowers who reside in rural areas. The USDA Guaranteed Loan is specifically meant to assist rural homebuyers with competitive interest rates and loan terms.

Learn more about USDA Loans with our complete guide.

I see the USDA Loans are guaranteed, what does this mean?

When you hear that the USDA Loan is guaranteed, it is in reference to the fact that the federal government insures a portion of each loan in the event the borrower defaults on their home loan. This backing, or guarantee, is what gives lenders more confidence in homebuyers and the ability to extend favorable rates and terms.

A common misconception of many borrowers interested Guaranteed Rural Housing Loans - or USDA Loan - is that the guarantee comes from the FDA. The USDA and FDA do work together to ensure that consumable products do not harm the American people; however, as it pertains to home loans, the USDA is the government organization that guarantees the loan, not the FDA.

Are only first-time homebuyers eligible?

No. There are no restrictions that prevent previous homeowners from using the USDA Loan program.

What is the maximum amount that I can borrow?

The USDA loan program does not limit the amount that a homeowner can borrower; however, most lenders conform to the loan limits set forth by Fannie Mae and Freddie Mac and will extend financing for up to $417,000.

How much are the closing costs for a USDA mortgage?

Closing costs vary by lender and location. With USDA Loans, it is possible to use gift funds from family and non-family members to pay for your closing costs. You will need to ask your loan officer for a gift letter to accompany your loan application.

What refinance options does the USDA Loan offer?

The USDA Loan can be used to refinance a mortgage into a lower rate; however, there is no cash-out or cash-back option with USDA Loans.

Learn more about USDA Loan refinancing here.

Is there a deadline to apply?

Home loans are made year round as long as funding is available. The USDA processes home loan applications in the order they are received.

What do I do if my local lender doesn't offer USDA Loans? is licensed to handle USDA Loans across the United States. Additionally, we specialize in USDA Loans, meaning your loan is handled quickly and more efficiently than with lenders who do not usually handle USDA Mortgages.

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USDA Loan Benefits

Do USDA Home Loan require a down payment?

With the USDA Rural Home Loan program, qualified borrowers can purchase a home with no required down payment, saving thousands of dollars in upfront costs.

Do USDA home loans have PMI?

USDA Mortgages do not have PMI, but instead have an upfront premium that is meant to cover any losses incurred by borrowers who may default. This fee is much less than the PMI required on FHA mortgages or mortgages where the borrower pays less than 20 percent of the down payment and is 2 percent of the purchase. Fortunately, the USDA will let you finance your Upfront Mortgage Insurance payment into your loan size. For example, if you borrowed a full $100,000 from your lender, your Upfront Mortgage Insurance would be $2,000, which you can finance into your mortgage. After financing, your loan size would be $102,000.

What types of terms do USDA Loans have?

Currently, USDA Loans offer the most flexible, 30-year fixed rate mortgage; however, beginning in September 2014, a 15-year fixed rate mortgage will be available. The USDA does not offer adjustable-rate mortgages.

What can I expect from USDA Loan rates?

USDA Home Loan rates are often lower than comparable, 30-year fixed-rate mortgages. This is due to higher lender confidence due to the USDA guaranteeing a portion of each loan.

USDA Home Loan Eligibility

How do I check if my home is USDA-eligible?

With the USDA Rural Guaranteed Housing Program, your home must be located in what the USDA defines as a rural area. It is important to note that the USDA's definition of rural is quite liberal and many small towns and suburbs of major cities qualify. Click here to see full USDA Loan eligibility guidelines.

Learn more about USDA Loan eligibility

What are USDA eligibility requirements?

As with any lending program, the USDA requires that the borrower demonstrate a reasonable ability and willingness to repay the mortgage loan. USDA lenders will view your credit history and income to verify your ability to repay the mortgage.

What is the USDA's minimum credit requirement?

There is no minimum score required by the USDA; however, most lenders require a minimum credit score of 620 to obtain financing.

What does the USDA require for employment eligibility?

You must establish employment to be eligible for the USDA Loan, and most lenders will require a minimum of two years of steady employment. If you are self-employed, you are eligible, but will be required to provide two years of federal tax returns to verify your income.

Can I get a USDA Mortgage after bankruptcy?

Yes, the USDA Loan Program requires the bankruptcy to be discharged for at least 3 years. The type of bankruptcy filed can impact the qualifying process as well.

Can I used a USDA Loan on investment property?

No, the USDA Rural Housing Program is for primary residences only. Farms,vacation homes and other types of homes that are not intended as the primary residence do not qualify.

Does a USDA home loan finance modular homes?

Modular Homes can be considered a USDA eligible property, but additional appraisal requirements will apply. is featured in

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