USDA loans offer 0% down to moderate-income buyers in eligible rural and many suburban areas. They have a 1% upfront guarantee fee and a 0.35% annual fee instead of PMI, an income limit of 115% of the area median, and require the home to be your primary residence. Many towns just outside cities qualify, so check the map before you rule it out.
Who qualifies
- Location: the home must be in an eligible area on the USDA’s property eligibility map. Eligibility is broader than most people expect.
- Income: household income up to 115% of the area median, counting everyone in the household, not just borrowers.
- Primary residence only.
- Credit: no official minimum, but around 640 is typical for automated approval.
The costs
| Fee | Amount |
|---|---|
| Upfront guarantee fee | 1% of the loan, usually financed |
| Annual fee | 0.35% of the balance, paid monthly |
| Down payment | 0% |
The annual fee is lower than most PMI and FHA mortgage insurance, so USDA often has the lowest payment for buyers who qualify. Compare with the mortgage payment calculator and FHA vs. conventional.
Try it: Town finderSearch towns within a commute of your job, then check promising ones on the USDA eligibility map; many outer suburbs qualify.Things to know
- The annual fee lasts for the life of the loan; refinancing to conventional later can remove it.
- Closing costs can sometimes be financed if the appraisal comes in above the price, and sellers can contribute up to 6%; see seller concessions.
- There’s no set loan limit, but the income limit and your debt ratios cap what you can borrow.
- Some lenders don’t offer USDA loans; ask before you apply.
Is USDA right for you?
If you have little saved, earn under the limit and are open to a home outside the city, USDA is worth checking first. Estimate your budget with the affordability calculator and compare it with FHA and conventional loans.
Common questions
Where can I use a USDA loan?
In areas the USDA marks as eligible on its property eligibility map, which includes many small towns and outer suburbs.
What is the USDA income limit?
115% of the area median income, counting everyone in the household.
Do USDA loans have mortgage insurance?
They have a 1% upfront guarantee fee and a 0.35% annual fee, which work like mortgage insurance but usually cost less.
Updated October 2026. Educational content. OfferBacked is not currently a lender and doesn’t issue pre-approvals or loans.