Mortgage

USDA Loan A zero-down government-backed mortgage for eligible rural and suburban buyers

Priya Shah By Priya Shah, Senior Mortgage Editor · Updated 2026-06-09
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A USDA loan is a government-backed mortgage through the USDA Rural Development program that lets eligible buyers in qualifying rural and suburban areas finance a home with 0% down. To qualify, your household income generally cannot exceed 115% of the area median income, and the property must be in a USDA-eligible location. Instead of traditional private mortgage insurance, USDA loans carry an upfront guarantee fee plus an annual guarantee fee built into your payment. These loans are designed to expand homeownership access where conventional financing may be harder to obtain. Eligibility depends on your income, household size, the property's location, and your credit profile, all of which vary by area. Because the income caps and eligible map boundaries change, you'll want to confirm current limits for your specific county before applying.
Also Known As
USDA Rural Development Loan USDA Guaranteed Loan Rural Housing Loan Section 502 Guaranteed Loan
Used in Context
  1. A first-time buyer with no large down payment used a USDA loan to purchase a home in a qualifying small town outside the city.
  2. Because their household income fell under 115% of the area median, the couple qualified for zero-down USDA financing.
  3. After comparing options through Dreamy Leads, a buyer in an eligible suburb learned a USDA loan could waive their down payment entirely.
Related Terms
Mortgage VA Loan A government-backed mortgage for eligible veterans with no down payment and no monthly mortgage insurance Mortgage FHA Loan A government-backed mortgage with low down payments for buyers with moderate credit Mortgage Conventional Loan A mortgage not backed by a government agency — the most common home loan type Mortgage Amortization The schedule that shows how each loan payment splits between principal and interest over time
Frequently Asked Questions

Do USDA loans really require no down payment?

Yes. USDA Rural Development guaranteed loans allow 0% down for eligible buyers, meaning you can finance the full purchase price. You'll still pay an upfront guarantee fee and an annual guarantee fee, plus closing costs, so budget for those even without a down payment.

What income do I need to qualify for a USDA loan?

Your total household income generally cannot exceed 115% of the area median income for your location and household size. Limits vary by county and change over time, so confirm the current figure for your specific area before applying, since exceeding the cap can disqualify you.

What fees come with a USDA loan instead of PMI?

Rather than private mortgage insurance, USDA loans include an upfront guarantee fee and an annual guarantee fee. The upfront fee can typically be financed into the loan, while the annual fee is spread across your monthly payments. Exact amounts vary, so ask your lender for current rates.

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