Stewardship Capital

USDA Rural Home Loans

A USDA loan is a government-backed home loan for homes in eligible rural and suburban areas. It is one of the few programs that may let a buyer purchase without a down payment. This page explains who it is for, how a property qualifies and what to expect.

What is a USDA loan?

A USDA loan is a mortgage guaranteed by the U.S. Department of Agriculture. It is meant to help moderate-income buyers purchase homes in eligible areas. The loan comes from a private lender, and the USDA guarantees part of it. The most common version is the Section 502 Guaranteed loan. It is for a main home only.

Is my property eligible?

Eligibility is based on location. The USDA has a map of eligible areas, and you check it by address. Many places that feel suburban can still qualify, and some places that feel rural do not. Maps change, so a property that qualified before might not today. Stephen checks the address before you write an offer.

Who qualifies for a USDA loan?

The USDA looks at both the borrower and the home.

• The home must be your main home. Investment homes do not qualify.
• The household income must fall within USDA limits for the county and family size. The limits change, so Stephen checks the current ones.
• The buyer must be a U.S. citizen, a permanent resident or a qualified non-citizen.
• The buyer must show steady income, acceptable credit and the ability to repay.
• The home must meet USDA safety and condition standards.

The USDA counts the income of most adults who live in the home, not only the people on the loan. That can surprise buyers. Ask about it early.

Do I need a down payment?

USDA is one of the few programs that may allow a purchase without a down payment, when the file qualifies. You will still have closing costs and may have other upfront money. Seller credits may help, within the limits of the program. See our seller concession limits page for how seller concessions work.

What fees come with a USDA loan?

USDA loans include guarantee fees, charged at closing and over time. The amounts are set by the USDA and can change, so Stephen confirms current fees on your file. The costs are explained in your loan estimate.

Is USDA a good fit for me?

It can be a fit for buyers with moderate income who have limited savings and want a main home in an eligible area. It is not always the best choice. Other programs may work better, depending on your income, credit and the home. Stephen compares USDA with your other options so you can pick with clear facts.

What do realtors need to know about USDA?

Check the address first. Then expect the home to be reviewed for safety and condition. Items like a worn roof, peeling paint, or problems with a well or septic system can matter. Sellers should know that repairs may be needed. Share the program's timing with everyone in the deal, since the USDA review adds a step.

Should I assume an area is in or out?

No. Do not assume. Eligible areas follow a map that can change, and two homes that are close together can be treated differently. Always check the exact address with Stephen. A buyer who is turned away at one address may still qualify at another.

Existing USDA borrowers may also have refinance options. Those rules differ from purchase loans. Our Refinance page covers refinance basics.

What does the process look like?

The steps look like other purchase loans, with a few additions.

• Check the address and income limits.
• Get pre-approved.
• Make an offer. The home must meet USDA condition standards.
• The lender submits the file for USDA review.
• Close the loan.

The USDA review can add time. Realtors should plan for it in the contract. Learn more on our Buy a Home page.

This is not a quote, a commitment to lend or an offer of credit. Stephen Chakerian, NMLS #2193331 | Stewardship Capital, a team of Barrett Financial Group, L.L.C., NMLS #181106 | Equal Housing Opportunity.