USDA loans are backed by the US Department of Agriculture to encourage homeownership outside of dense city centers. The headline feature is no down payment for buyers who qualify.
Two things have to fit
- Location: the home must be in a USDA-eligible area, which includes many suburbs and small towns, not just farmland
- Income: your household income must be at or below the limit for your county
The upside
Zero down is the big one. USDA loans also tend to have competitive rates and lower mortgage insurance costs than some other low-down-payment options.
The tradeoffs
There is an upfront guarantee fee and a small annual fee, which is USDA's version of mortgage insurance. And both the property and your income have to meet the program rules.
Do not assume your area does not qualify. Eligibility maps cover more ground than people think, so it is worth a quick check before ruling it out.