USDA Loans
The best mortgage option for rural properties that most buyers overlook. Learn how you can purchase your dream country home with absolutely no money down and enjoy lower monthly payments than conventional and FHA loans.
What Are USDA Loans?
USDA loans represent one of housing finance’s best-kept secrets! A 0% down payment mortgage program backed by the United States Department of Agriculture. Designed to promote rural development, these loans help moderate-income families purchase homes in eligible areas without the substantial savings typically required for a down payment.
The program offers two main mortgage options: Direct Loans, which are issued by the USDA itself to very-low and low-income applicants, and Guaranteed Loans, which are obtained through approved lenders but insured by the USDA to encourage lending in rural communities.
USDA financing comes with several compelling benefits: 100% financing with no down payment required, lower mortgage insurance premiums than FHA loans, competitive fixed interest rates, and the ability to roll closing costs into the loan amount. While property location and household income restrictions apply, these loans open the door to homeownership for many families who might otherwise continue renting for years while saving for a down payment.
What Do You Need To Qualify for a USDA Loan
- Property Located In A USDA-Eligible Rural Or Suburban Area
- Minimum 580 Credit Score Needed
- No Down Payment Required – 100% Financing available
- Maximum Debt-To-Income Ratio 41%
- Household Income Cannot Exceed USDA Income limits 115% Of The Area Median Income
- Must occupy the property as your primary residence
Who Are USDA Loans for?
USDA loans serve aspiring homeowners who meet specific criteria designed to support rural development. These mortgages are perfect for borrowers with moderate incomes (not exceeding 115% of the Area Median Income) who want to purchase in eligible rural or suburban communities. The program particularly benefits those who have decent credit but limited savings for a down payment. USDA loans often become the ideal solution for young families, first-time homebuyers, essential community workers, and those looking to escape rising urban housing costs by moving to more affordable areas just outside city limits. Many suburban neighborhoods on the outskirts of metropolitan areas qualify, making these loans accessible to more homebuyers than many realize.
The USDA Loan Process and How To Get Started
Beginning your USDA loan experience with MacLagan Home Loans is straightforward and thoroughly supported. Our methodology is specifically developed to address the distinctive elements of USDA rural development financing while creating affordable homeownership opportunities. Start by completing our Rural Property Financing Questionnaire online or booking a personalized meeting with our USDA loan specialists. We’ll assist you in gathering all necessary materials, including valid identification, income documentation, financial records, and credit authorization forms.
To get started on your USDA loan:
- Fill out the streamlined USDA qualification form on our secure website
- Receive a call from our dedicated rural lending specialist to discuss your needs
- Submit your income and financial documentation through our protected portal
- Get your detailed pre-approval within 24 hours
- Start house-hunting in USDA-eligible locations with confidence in your budget
- Complete your home purchase in 21 days or less with our guidance through the USDA’s review process
Why a USDA Loan?
USDA loans stand out as one of the few true zero-down-payment mortgage options available today, making them ideal for moderate-income families looking to purchase homes in rural and eligible suburban areas.
Unlike FHA loans requiring 3.5% down or conventional loans needing 3-20%, USDA loans offer 100% financing with no down payment whatsoever. Plus, USDA loans feature lower mortgage insurance premiums than FHA loans, resulting in more affordable monthly payments.
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Loans we offer
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Conventional Loans
A popular mortgage option for borrower’s with strong credit and stable income. Down payments as low as 3% and with competitive and adjustable rate options.
Read moreFHA Loans
A great mortgage option for first-time home buyers or those with limited funds. They have flexible credit requirements and offer down payments as low as 3.5%.
Read moreVA Loans
The best loan option for eligible military veterans and active duty service members. 100% financing and no mortgage insurance.
Read moreJumbo Loans
A great mortgage option for borrower’s looking to finance a home that exceeds conventional loan limits. Down payments as low as 10%.
Read moreDSCR Loans
Rental property loans that require no income or employment verification. The best loan for real estate investors and landlords
Read moreFix & Flip Loans
The perfect loan option for real estate investors who are looking to finance a property that needs renovation. Finance 100% of the renovation with down payments as low as 10% of the purchase price.
Read moreUSDA Loans FAQ
Are USDA loans hard to qualify for?
USDA loans aren’t particularly difficult to qualify for compared to other mortgage options. The program requires a minimum credit score of 580 , a debt-to-income ratio typically below 41%, and a household income within program limits for your area (usually 115% of the area median income. The property must be in a USDA-eligible location, which encompasses many suburban areas outside major cities. If you meet these criteria, a USDA loan offers the significant advantage of 100% financing with no down payment required.
Is it easier to get FHA or USDA?
For most borrowers, FHA loans have more flexible qualification requirements than USDA loans. FHA accommodates lower credit scores, allows higher debt-to-income ratios in many cases, and has no property location restrictions or income limits. USDA loans, while offering the significant advantage of zero down payment, require purchasing in eligible rural/suburban areas, having income within program limits, and typically maintaining a credit score of 580. If you qualify for both, the decision often comes down to whether you can afford FHA’s 3.5% down payment versus USDA’s 100% financing.
What are the disadvantages of a USDA loan?
Despite their benefits, USDA loans have notable disadvantages. The geographic eligibility requirement limits purchases to designated rural and suburban areas. Income restrictions (typically up to 115% of area median income) may exclude some borrowers, particularly in dual-income households. The USDA loan process often takes longer than conventional loans due to the required USDA approval step. Mandatory mortgage insurance includes both upfront (1%) and annual (0.35%) fees. Additionally, USDA loans can only be used for primary residences, not investment properties or second homes.
What is the maximum income for a USDA loan?
USDA loans income limitations are based on your entire households income and location. The household income on USDA loans are capped at 115% of the area median income and can adjust for a larger household. A family of four in a rural county might have a limit around $91,000, while the same family in a higher-cost suburban area could qualify with income up to $130,000 or more. The USDA calculates household income by including all adults living in the home, not just the borrowers. These limits ensure the program serves its intended purpose of helping moderate-income families achieve homeownership in rural and eligible suburban communities.
Can you refinance an USDA loan?
Refinancing a USDA loan is definitely possible through several programs. The USDA Streamline Refinance offers a simplified process for current USDA borrowers with 6 months of on-time payments, with no appraisal required and no income needed. The USDA Non-Streamlined Refinance provides options for those who don’t qualify for streamlining. You can also transition to a conventional, FHA, or VA loan if eligible. Common refinancing goals include lowering your interest rate, reducing monthly payments, changing from an adjustable to a fixed rate, or adjusting your loan term. MacLagan Home Loans can help determine which option best suits your financial situation.