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USDA Loans

Zero down, a fixed rate and a low monthly fee, backed by the U.S. Department of Agriculture. If the home sits in an eligible area and your household income is under the local limit, this is often the cheapest way into a first home. More of Florida, Tennessee, Georgia and Colorado qualifies than most people expect.

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Licensed in Florida, Tennessee, Georgia and Colorado. NMLS 222883.

$0
Down payment required
1%
Upfront guarantee fee, can be financed
0.35%
Annual fee, paid monthly
115%
Of area median income, the household limit

How a USDA loan works

The USDA Guaranteed Rural Housing program is a mortgage made by a lender like CPF and guaranteed by the U.S. Department of Agriculture. That guarantee is what lets us lend 100% of the purchase price with no down payment, at a competitive fixed rate, to buyers who might not qualify for a conventional loan.

Two rules decide whether it is open to you. First, the home must be in a USDA-eligible area, generally a rural area or a town with a population of 35,000 or less, checked on the USDA eligibility map. That covers much of Pasco, Hernando, Citrus, Polk and Marion counties in Florida, and large parts of Tennessee, Georgia and Colorado outside the metros. Second, your household income must generally fall under 115% of the area median income. The USDA resets those limits every year, and they count every adult living in the home, not just the people on the loan.

In place of mortgage insurance, USDA charges a 1% upfront guarantee fee, which can be rolled into the loan, and an annual fee of 0.35% of the balance, paid monthly. That monthly fee is a good deal lower than the premium on an FHA loan. You can use the loan to purchase, build, rehabilitate, improve or relocate a home, as long as it will be your primary residence, and it comes as a 30-year fixed only.

Is it right for you?

A good fit if

  • You are buying in a rural or small-town area that shows as eligible on the USDA map
  • You have little or nothing saved for a down payment
  • Your household income is moderate for your county, generally under 115% of the area median
  • You want a fixed rate with a monthly fee lower than FHA mortgage insurance

Look at something else if

  • The home is inside a city or suburb that is not USDA-eligible (FHA or a 30 year fixed)
  • Your household income is over the local USDA limit (30 year fixed with 3% to 5% down)
  • You have served in the military; a VA loan also has no down payment, with no location or income limits
  • You are buying a second home or investment property, which USDA does not allow (conventional)

What it takes to qualify

These are the typical USDA guidelines. The location and income tests are firm; most of the rest has room for judgement, and your loan officer can check a property and your household in a few minutes.

Property location
The home must be in a USDA-eligible area, generally rural or a town with a population of 35,000 or less. Eligibility is by address, so a home just outside a city can qualify while one a mile closer does not. We check the USDA map for you.
Household income
Total income for every adult in the household, whether or not they are on the loan, must generally be at or under 115% of the area median income. Limits vary by county and household size and are updated every year.
Credit score
USDA does not set a minimum score. A score of 640 or higher generally allows a streamlined approval through USDA’s automated system (GUS); lower scores can still be approved with a closer look at your file.
Debt-to-income ratio
Guidelines generally allow a housing payment up to 29% of gross monthly income and total debts up to 41%. Exceptions are common for borrowers with strong credit, savings or a history of paying similar rent.
Loan amount
USDA sets no loan limit. In practice the income cap and debt-to-income rules decide how much you can borrow, so the program suits modestly priced homes rather than the top of the market.
Property and occupancy
Primary residence only. Single-family homes, eligible condos and townhomes, and some manufactured homes, in decent, safe and sanitary condition. No second homes or investment property, and no income-producing farms.

Guidelines are the program's typical requirements, not a commitment to lend. Your loan officer will tell you exactly what applies to your file.

How it compares

The programs people weigh against a USDA loan most often.

Loan Minimum down Rate Term Mortgage insurance Best for
USDA This page None required Fixed 30 years Upfront and annual guarantee fee Buying in an eligible rural or small-town area with no down payment.
FHA Government-backed 3.5% minimum Fixed or adjustable 15 or 30 years Upfront and monthly premium Buyers with a smaller down payment, a lighter credit history or more debt than a conventional loan allows.
VA Government-backed None required Fixed or adjustable 15 or 30 years None; a one-time VA funding fee instead Veterans, active-duty service members and eligible surviving spouses.
30-year fixed Conventional As little as 3%; 5% is typical Fixed for the life of the loan 30 years Until you reach 20% equity The lowest fixed monthly payment, and the loan most first-time buyers start with.

Compare all eight programs

Getting started

Three steps, and the underwriters, processors and closers all sit in the same office as your loan officer.

  1. Tell us about the home and your goals

    Five minutes online or by phone. No credit pull is needed for a first estimate.

  2. See the numbers side by side

    A loan officer prices a USDA loan against the closest alternatives so you can compare payment, cash to close and total cost.

  3. Get pre-approved and close

    We verify income, assets and credit, issue your pre-approval letter, and our in-house team takes it through closing.

Get pre-qualified See the full process

USDA loan questions, answered

How do I know if a home is in a USDA-eligible area?

Eligibility is by address on the USDA property eligibility map. Rural areas and towns with a population of 35,000 or less generally qualify. Large parts of Pasco, Hernando, Citrus, Polk and Marion counties in Florida are eligible, along with much of Tennessee, Georgia and Colorado outside the metro areas. Send us an address and we will check it for you.

Is a USDA loan really zero down?

Yes. The loan can cover 100% of the appraised value, and the 1% upfront guarantee fee can be added to the loan as well. You will still have closing costs, though these can often be paid with seller credits, gift funds or, if the home appraises for more than the price, rolled into the loan.

Whose income counts toward the USDA limit?

Every adult who will live in the home, not just the borrowers. A working spouse who is not on the loan, or an adult child with a job, is counted. The limit is generally 115% of the area median income for your county and household size, and USDA publishes new limits each year.

Does a USDA loan have mortgage insurance?

Not by that name. USDA charges a 1% upfront guarantee fee, usually financed into the loan, and an annual fee of 0.35% of the remaining balance, collected monthly. For most borrowers that monthly cost is lower than FHA mortgage insurance or private mortgage insurance on a low-down conventional loan.

What credit score do I need?

USDA does not set a minimum. A score of 640 or higher generally allows a streamlined approval through USDA’s automated underwriting system. Below that, the loan is reviewed by hand and can still be approved with a reasonable explanation and a clean recent history.

Can I refinance a USDA loan later?

Yes. If you already have a USDA loan, the USDA streamlined-assist refinance can lower your rate and payment with limited paperwork and generally no new appraisal. You can also refinance into a conventional loan once you have enough equity, which removes the annual fee altogether.

Further reading

Other loan programs

Talk to a loan officer about a USDA loan

Tell us what you are trying to do and we will come back with real numbers: rate, payment, cash to close and how this loan stacks up against the alternatives. No obligation, and no credit pull until you ask for one.

CPF Mortgage
10710 FL-54 c101
Trinity, FL 34655
(727) 226-1040

Licensed mortgage lender and broker in Florida, Tennessee, Georgia and Colorado. NMLS 222883.

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