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USDA Loan Program

USDA Loan Rates

Due to the USDA guarantee, lenders have an increased ability to provide competitively low interest rates on USDA loans. Eligible borrowers find that rates are generally lower with the USDA loan program than with conventional mortgage options.

Determining USDA Loan Rates

There are multiple items that determine what a borrower will pay in interest. The main contributing factor is your credit profile, although understand that interest rate quotes will vary by lender.

Borrowers with a solid credit profile often receive the most advantageous rates; however, even if your credit isn't in perfect shape, you may still have an easier time qualifying for a competitive rate due to the USDA guaranteeing a portion of each loan against default.

It is also important to note that market conditions play a vital role in your mortgage rate. Conditions change daily, which can drastically affect USDA mortgage rates.

See if you qualify for a USDA loan.

USDA Loans and APR

Once you start the USDA loan process, you’ll receive official estimates from your lender that include both the interest rate on the mortgage and what’s known as the annual percentage rate (APR). While interest rate reflects the cost of borrowing, APR shows the entire picture with lender fees required to finance the loan – which can include interest rate, origination fees, closing fees, discount points and fees dependent on the transaction.

APR is a tool that can help you compare USDA loan offers, but understand that lenders can calculate it differently.

Lock in Your USDA Loan Rate

A USDA loan rate lock is a guarantee the USDA lender will provide a specific interest rate by a specific date, thereby protecting the borrower from rate fluctuations during the rate lock period. Rate locks are often set for 30, 45 or 60 days, but can be shorter or longer.

Policies and guidelines on rate locks and when you can lock your rate can vary by lender.

Locking in your interest rate at the right time is key, which means it's important to find a lender who understands your needs and the forces that shape USDA loan interest rates.

See our next section on the USDA home loan process here.

Check Official USDA Loan Requirements

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