If you are looking for a home loan and you are in a rural area, then this loan product may be best for you. The USDA Rural Housing program, administered by the U.S. Department of Agriculture, dedicates the program to preserving rural communities. These loans offer long-term mortgage financing, with some additional benefits, for rural applicants that qualify.

Who Qualifies?

  • Rural housing borrower (located in eligible Guaranteed Rural Housing area)

    • Note: While there are income eligibility requirements, if the property is not located in an eligible Guarantee Rural Housing area, this loan product cannot apply.

  • U.S. resident, noncitizen national, or permanent resident alien
  • Low-to-moderate-income
  • Rural housing average FICO score of 703
  • Purchasing a primary single-family household
  • No active farm or income producing property
  • Minimum credit score of 600

Benefits of a USDA Loan

If you qualify for a USDA loan, then there are many perks that come with it:

  • No Down Payment: Most mortgages require an initial down payment that is paid on closing day. Because of this, many homebuyers say that saving for the down payment was one of the hardest parts of the homebuying process. Since USDA loans require no down payment, purchasing a home with a USDA loan program may be advantageous for those with low down payment funds.
  • Low Credit Score Requirement: USDA’s programs typically require a 640 minimum credit score. Direct Mortgage Loans can lend below 640, but other compensating factors will be needed in order to offset the lower credit score.Furthermore, the applicant must prove that they are willing and able to repay their home loan.
  • Low Origination Fee: Borrowers will pay a guaranteed fee of 1% of the total home loan amount. This fee can be financed into the loan so it does not need to be paid out of pocket.
  • USDA Rates: Rates of USDA loans are usually lower than those of typical conventional home loans.


As stated above, there are very low fees that accompany a USDA loan. Generally, most mortgage loans have an array of fees and closing costs. For a USDA loan, there is a 1% up-front Guarantee Fee paid at closing. There is also a 0.35 Annual Renewal Fee collected on a monthly basis from borrowers.

More on Qualifying Income

USDA loans are for low-to-middle-income families. The adjusted gross income of the family cannot be more than 115% of the median income in the area. Applicants must also show that they have stable income. This mitigates the risk of borrowers not paying their mortgage payments on time. This is based on assets, savings, and consistent income revenues.


All in all, the USDA Rural Housing program loans give eligible rural housing borrowers the ability to borrower more for less. Find out about other government-backed mortgage loans. If you are interested in a USDA loan, contact us now!