What Is a USDA Loan?

A USDA (United States Department of Agriculture) home loan provides a no down payment, low-interest-rate mortgage for eligible borrowers considering purchasing rural or suburban property. USDA loans are not limited to farmers, but offer benefits to potential homebuyers in qualifying areas.

USDA loans include mortgage guarantees as well as direct mortgage loans issued by the USDA. Direct mortgage loans are restricted to low-income applicants, and feature interest rates as low as 1%.

Qualifying properties in rural and suburban areas generally feature houses in wide open spaces, typically outside of city limits, or in communities with fewer than 20,000 residents.

These programs provide a great opportunity for a lower-cost first-time home purchase with low interest rates. The property must be located in a qualifying area.