USDA Home Loans
USDA Loans for Zero-Down Rural and Suburban Homes
Guaranteed by the U.S. Department of Agriculture, USDA loans let eligible households buy with no down payment in qualifying rural and suburban areas. The Smith Mortgage Group checks your address and household income up front, so you know you qualify before you start touring homes.
What It Is
What a USDA guaranteed loan offers
The USDA guaranteed loan program was created to encourage homeownership outside of dense urban centers. A private lender makes the loan and the U.S. Department of Agriculture guarantees a portion of it, which allows eligible buyers to finance the full purchase price with no down payment.
Two tests determine eligibility: the property must sit in a USDA-designated eligible area, and total household income must fall within the limit for your county and household size. Many people are surprised to learn that eligible areas often include small towns and the outer edges of mid-size metros, not just farmland.
Instead of conventional PMI, USDA loans carry an upfront guarantee fee, which can usually be financed, and an annual fee paid monthly. Our team handles USDA purchases on existing homes and qualifying new construction, and existing USDA borrowers can explore streamlined options on our refinancing solutions page.
Who It Fits
USDA financing may be right for you if you
- Want to buy in a small town, rural community or eligible suburb rather than a city center
- Have household income at or below the USDA limit for your county and family size
- Have limited savings for a down payment but steady, documented income
- Will live in the home as your primary residence
- Do not have military service eligibility for a VA loan but still want a zero-down option
- Have a credit history that shows on-time payments, even if your score is not perfect
We confirm both property and income eligibility at the start, so you can focus your search on homes that actually qualify.
Key Benefits
Advantages of a USDA mortgage
100% financing
Eligible borrowers can finance the entire purchase price, freeing up savings for closing costs, moving and furnishing.
Guarantee fees instead of PMI
USDA uses an upfront and an annual guarantee fee in place of private mortgage insurance, which can keep monthly costs manageable.
Wider reach than you might think
Many communities near larger cities fall inside eligible boundaries, giving buyers more choices than the word rural suggests.
Help with closing costs
Seller concessions and documented gift funds may help cover closing costs, subject to program rules.
Requirements
USDA qualifying basics
Every application is reviewed under current USDA guidelines and lender underwriting. These are the main areas we examine.
| Requirement | What it means |
|---|---|
| Property location | The home must be in a USDA-eligible area, which we verify by address |
| Household income | Total household income must fall within the county limit for your household size |
| Occupancy | The home must be your primary residence; investment and vacation homes do not qualify |
| Credit and repayment | A history showing a willingness and ability to repay debts |
| Income stability | Dependable, documented income that supports the new payment |
| Property standards | The home must be safe, sound and meet program property requirements |
Compare
USDA vs VA vs FHA for low-down buyers
Each of these programs reduces the cash you need upfront. Location and service history usually decide which one you can use.
| Feature | USDA | VA | FHA |
|---|---|---|---|
| Typical minimum down | 0% for eligible borrowers | 0% for eligible borrowers | 3.5% with qualifying credit |
| Who can use it | Income-eligible households | Eligible veterans, service members, surviving spouses | Any qualified buyer |
| Where you can buy | Eligible rural and suburban areas | Anywhere | Anywhere |
| Ongoing cost | Annual guarantee fee | No monthly PMI | Annual MIP |
If you have military service, a VA home loan may be the stronger zero-down option. If your preferred area is not eligible, an FHA loan with 3.5% down is a common fallback. Compare all three in the loan comparison tool.
Steps
Steps to a USDA home loan
Confirm eligibility first
Send us the address or area you are considering along with your household details. We check location and income limits before you shop.
Get your pre-approval
With documents verified and no hard credit pull to start, you receive a pre-approval showing your zero-down buying power.
Find an eligible home
Shop with your agent in qualifying areas, using your pre-approval to make a confident offer.
Appraisal and USDA review
We order the appraisal, complete underwriting and submit the file for the USDA guarantee.
Close and move in
Most loans close in 30–45 days. Sign your documents and collect your keys with no down payment required.
FAQ
USDA loan FAQs
How can I find out if a home is in a USDA-eligible area?
Send us the property address and we will check it against USDA eligibility maps. Boundaries are reviewed periodically, so confirming the specific address before you make an offer is the safest approach.
Whose income counts toward the USDA limit?
USDA generally looks at the income of all adult members of the household, not just the people on the loan. Certain deductions may apply, such as for dependents, so we calculate it carefully during pre-approval.
Can I use a USDA loan for new construction?
Yes, newly built homes in eligible areas can qualify when they meet program requirements. If you plan to build a custom home, ask about one-time close options on our construction loans page.
What will I need to pay at closing with a USDA loan?
While no down payment is required for eligible buyers, you will still have closing costs and prepaid items. Seller credits and documented gifts may cover some or all of these, depending on your contract and program rules.
Can I buy a farm or rental property with a USDA home loan?
No. The USDA guaranteed home loan is designed for primary residences. Income-producing farms and rental properties require other financing, such as our investment property loans.
Are state down payment assistance programs compatible with USDA?
State and local down payment assistance programs may be available to help with closing costs — we can help you check eligibility and how it would combine with a USDA loan.
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