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If you're buying a home in an eligible suburban or rural area, you may want to consider getting a mortgage loan issued or secured by the U.S. Department of Agriculture (USDA). USDA loans offer easy qualifying requirements and low interest rates. However, you do have to fulfill certain requirements, such as providing reliable proof of income and keeping your loan balance below allowable limits. Learn more about USDA loan eligibility and check out our picks for the best USDA loan lenders.
Best for: Customer satisfaction
Fairway Independent Mortgage
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The combination of high customer satisfaction and a large branch network makes Fairway a solid pick. What's more, the lender offers a wide range of fixed-rate and adjustable-rate mortgage terms across an array of mortgage products, including USDA loans.
Min. Credit Score 580 FHA 620 other mortgage products
Min. Down Payment 0% for USDA loans and VA loans 3.5% for VA loans (minimum 580 credit score) 3% for conventional loans
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Best for: Low fees and transparent pricing
AmeriSave Mortgage Corporation
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AmeriSave operates in 49 states and allows you to chat online with a mortgage professional. It offers all government-backed mortgages and a low down payment conventional mortgage, giving borrowers many opportunities to become homeowners with little or no money down. There's no origination fee for a conventional loan here, making Amerisave a lender to get to know when you're shopping for a home loan.
Min. Credit Score 600 FHA 620 other mortgage products
Min. Down Payment 0% USDA loans and VA loans 3.5% FHA 3% conventional loans
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Best for: Types of mortgages available
Flagstar Bank Mortgage
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Flagstar Bank offers a wide variety of mortgage options to match your individual needs. It offers personally tailored mortgage options, specialty loans, renovation and new home construction loans, professional loans, and many other personalized financing solutions.
Min. Credit Score Conventional - 600 FHA - 580 VA - 580 to 600 Construction - 680 to 700 USDA - 580 minimum Jumbo - 680 to 740
Min. Down Payment 0%-3.5% (FHA and VA loans) 3% (conventional)
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Best for: Low credit scores
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With programs for first-time home buyers and down payment assistance, Guild is worth checking out for most people, especially first-time buyers. Guild is one of the top independent mortgage lenders in the nation.
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Min. Down Payment 3% Conventional 0%-3.5% FHA, USDA loans, & VA loans
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USDA loans are home loans the Department of Agriculture facilitates. There are three primary types of USDA mortgage loans.
These loans are intended for rural residents with low incomes (below 115% of the area median income). Borrowers are not required to make a down payment to get a USDA loan. However, the home must act as the buyer's primary residence.
These loans are unique because they're made through private lenders (not the USDA itself), then they're guaranteed by the USDA. The best USDA lenders are transparent about the process and any costs associated with your home loan.
To qualify for a single family housing guaranteed USDA home loan, buyers must have reasonable credit. Rates vary from one lender to another, and loans are available only from lenders approved to issue loans through the USDA program. If funds are limited, first-time home buyers are given priority.
These loans are meant to help low- and very low-income borrowers get an affordable home in a rural area. Borrowers do not need to make a down payment, but because these loans are issued directly by the USDA (not a private lender), the criteria to qualify is a bit more strict. Requirements include:
There are a few requirements for homes purchased with a single housing direct USDA loan, including:
The standard USDA home loan repayment timeline is up to 33 years (unless this would make payments too high). Direct loans can be repaid over as long as 38 years for very low-income borrowers. The interest rate is based on current market rates, but could be as low as 1% when modified by repayment assistance. As of July 1, 2023, the current rate for low- and very low-income borrowers is 4.125%.
These loans are issued directly by the USDA (not a private lender) through the Section 502 Direct Loan Program.
These loans empower individuals and families with very low incomes to repair or improve their homes. Seniors with low incomes can also get grants to eliminate health and safety risks within their homes. Requirements to qualify for a USDA single family housing repair loan include:
Borrowers can get a USDA home loan for repairs up to $40,000 to be repaid over as long as 20 years. The interest rate on the loan is fixed at 1%. Applications are accepted at local rural development offices only.
These loans are made available through the Section 504 Home Repair Program.
How much will my monthly mortgage payment be?Our mortgage calculator can help you estimate your monthly mortgage payments using various loan terms, insurances, and taxes.
Qualifying criteria can vary by lender. If you are applying for a loan guaranteed by the USDA, you'll need to check with your private lender. Some of the best USDA lenders will accept low-credit borrowers -- so don't worry if your credit score isn't ideal. If you're applying for a loan from the USDA (a direct or repair loan), talk to your local office about requirements.
Generally, USDA borrowers must:
USDA mortgages don't require a down payment, but if a close friend or relative wants to give you a down payment gift, you're welcome to use it for part or all of your down payment. (Some mortgage types don't allow this.)
Not every lender offers USDA-backed mortgages. To get started, look through the list above to find the best mortgage lenders for USDA loans.
Mortgage Calculator: How Much House Can I Afford? Home I Can Afford Total Mortgage CostIf you're interested in a USDA direct loan or a home improvement loan, the USDA will be your lender. You'll need to visit your local rural development office to get started with an application.
If you want to obtain a loan that's guaranteed by the USDA, you'll have to choose a private lender first. To make sure you find the best mortgage lender for your USDA loan, get quotes from at least three different lenders. Rates and terms can vary. Getting multiple quotes allows you to compare USDA mortgage lenders.
When you're comparing mortgage rates, here are a few important questions to ask:
USDA loans are a good option if you're purchasing a home in an eligible rural or suburban area and you meet the USDA's income limits. They're a great fit if you want a home with no down payment requirement, and especially helpful if you need less stringent qualifying requirements than a conventional loan.
USDA loans may be your only option for loans that require no down payment at all, unless you can qualify for a VA loan. And while the best USDA lenders are open to borrowers with low credit, most lenders offering USDA loans require a credit score of 640 or higher. If your credit is very low, an FHA loan may be a better option. These are available with credit scores as low as 500 with a down payment of 10%, or 580 with a 3.5% down payment.
If you have good credit and a down payment of at least 20% of your home's value, a conventional loan will often be more affordable than a USDA loan. With a conventional loan, you won't have to pay a guarantee fee or mortgage insurance. If you make above the income limits for a USDA loan, you'll also have to consider other options since you won't qualify.
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= Best
= Excellent
= Good
= Fair
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Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor
Low fees and transparent pricing
Rating image, 4.5 out of 5 stars. 4.5/5 Circle with letter I in it.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
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= Excellent
= Good
= Fair
= Poor
Types of mortgages available
Rating image, 3.5 out of 5 stars. 3.5/5 Circle with letter I in it.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
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Low credit scores
A USDA loan is one of several loans issued or guaranteed by the Department of Agriculture that helps lower- and middle-income borrowers purchase homes in rural or suburban areas.
No. But when you get a USDA loan from a private lender, the USDA charges "guarantee fees." These serve the same function as private mortgage insurance does on conventional loans.
Yes. Your income can't exceed 115% of the area median income if you'll be applying for a loan that's guaranteed by the USDA and issued by a private lender. There are more stringent income limits on direct loans issued by the USDA.
There is no minimum credit score required for loans guaranteed by the USDA or for either direct loans or home improvement loans. However, when private lenders issue loans with a USDA guarantee, they often (but not always) require a credit score of at least 640.
USDA loans are perfect for moderate-income, low-income, and very low -income buyers who have stable employment and are shopping for a home in an eligible rural area. Most of the U.S. is an eligible area, but not cities. A USDA loan can only be used for a primary residence, so if you're looking for an investment property, this isn't the right loan program to help you get one. The home must be safe and sanitary. An inspector will make sure it meets minimum standards. It's okay if you plan to run a business out of the home (like a daycare) but you may not use a USDA loan for an income-producing property (like a working farm). Also, the home may not have an in-ground swimming pool. The USDA single family direct home loan is for low- and very low-income borrowers who can't get an affordable mortgage elsewhere. This home loan is made directly by the U.S. Department of Agriculture to the borrower for a home no larger than 2,000 square feet. The USDA guaranteed loan program is for low- and moderate-income borrowers who can qualify for a loan through a lender. This loan has fewer restrictions.
To be eligible for a USDA guaranteed loan, household income cannot exceed 115% of the area median income. The income limits for a USDA direct loan are lower. You can search for “Single Family Housing Self-Assessment” on usda.gov to check your eligibility.
USDA loan guarantee program borrowers pay a one-time upfront 1% guarantee fee and a 0.35% annual fee. Most of the time, the guarantee fee is rolled into the loan. The annual fee is based on the average annual unpaid principal balance. The figure is calculated for the life of the loan and spread out in equal installments that are added to your monthly payments. USDA direct loan borrowers pay a $25 credit report fee. All USDA borrowers pay typical closing costs, but they can be rolled into the loan rather than paid out of pocket.
