USDA
Purchase

A USDA mortgage loan is a type of home loan backed by the U.S. Department of Agriculture, designed to promote homeownership in rural and suburban areas. Officially known as the USDA Rural Development Guaranteed Housing Loan Program, it helps low- to moderate-income borrowers purchase homes with little or no down payment. This makes USDA loans an attractive option for individuals and families who may not have significant savings for a down payment or who may find it difficult to qualify for other types of loans.

One of the key features of USDA mortgage loans is that they offer 100% financing, meaning that borrowers can finance the entire cost of the home without a down payment. In addition to this, USDA loans typically have lower interest rates compared to conventional loans, as well as more lenient credit score requirements, which makes them more accessible to borrowers with less-than-perfect credit. Borrowers must meet certain eligibility criteria, such as income limits that vary by location, and the property must be located in a designated rural area, though many suburban areas also qualify.

There are two main types of USDA loans: the Guaranteed Loan Program, which is available through approved lenders, and the Direct Loan Program, which is directly issued by the USDA to very low-income borrowers. The Guaranteed Loan Program is more common and is designed for moderate-income borrowers, while the Direct Loan Program targets those with lower incomes and provides additional financial assistance. USDA loans also require mortgage insurance, though the premiums are generally lower than those for FHA loans, making them an affordable option for qualifying homebuyers.