USDA

The US Department of Agriculture (USDA) offers a zero-down payment loan option in some rural areas. The program gives lenders the ability to provide an affordable housing option to low to moderate-income households helping improve the quality of life for communities in these areas.

Although no down payment is required, there are costs that buyers will incur purchasing a property with a USDA loan. In regards to financing, the buyer will need to cover the closing costs for the loan via personal funds, seller credit, or lender credit. In addition to the closing costs, all USDA loans come with upfront and annual guarantee fees. These fees are similar to mortgage insurance and the premiums fund the USDA loan program. The annual guarantee fee is added to your monthly payment and remains on the mortgage for the entire life of the loan.

The program has strict requirements for both income and property. For income – the household income cannot exceed 115% of the median household income for that area. All household members’ income must be considered in the qualification. The program also has a strict debt-to-income ratio cap meaning that your overall monthly debt (including the new mortgage) will need to exceed 43% of your monthly gross income.

The property needs to be in a USDA lendable area.

To determine if a property is eligible or find local income limits please visit the USDA Eligibility page for current information.