USDA Loans: 0% Down for Eligible Areas

A USDA guaranteed loan requires that the home be in a USDA-eligible (generally rural or semi-rural) area, that your household income not exceed 115% of the area median income, and that you'll live in the home as your primary residence. There's no down payment requirement and no government-set minimum credit score, though lenders commonly look for around 640. You'll pay a 1% upfront guarantee fee and a 0.35% annual fee.

USDA loans are limited to designated rural and many suburban-fringe areas, but the eligible map is broader than most people expect — a large share of the country's land area qualifies, including many small towns and outskirts of metros. Eligibility is by the property's address, not a general zip-code rule, so you check the specific home on USDA's property-eligibility map. If the address qualifies, the loan is on the table.

Your total household income generally can't exceed 115% of the area median income (AMI) for the county, so the dollar limit depends on where you're buying and your household size. USDA counts income from all adult household members, not just the borrowers, though certain deductions apply. Because the limits are set per area and updated periodically, check the current figure for your county on USDA's site before assuming you qualify.

If you qualify for USDA, it's often cheaper: it requires 0% down versus FHA's 3.5%, and its fees (1% upfront, 0.35% annual) are lower than FHA's mortgage insurance (1.75% upfront, ~0.55% annual). The catch is eligibility — USDA restricts you to eligible areas and caps your income at 115% of AMI, while FHA has no location or income limit. So USDA usually wins on cost when you fit its box; FHA is the fallback when you don't.

USDA doesn't set a federal minimum credit score, but most lenders look for around 640, which allows streamlined automated underwriting. Below that, some lenders will still consider you with manual underwriting and documentation, but it's harder. As with any loan, a higher score improves your rate, so it's worth checking and improving your credit before applying.

Yes. Along with VA loans, USDA is one of the only mortgage programs that allows 0% down — you can finance 100% of the purchase price. You still owe closing costs, but those can sometimes be covered by seller concessions, lender credits, or gift funds, and the 1% upfront guarantee fee can be rolled into the loan rather than paid in cash. That makes USDA one of the lowest-cash-to-close paths for eligible buyers.

USDA charges two fees in place of traditional mortgage insurance: a 1% upfront guarantee fee (which can be financed into the loan) and a 0.35% annual fee charged on the loan balance and billed monthly. On a $250,000 loan that's about $2,500 upfront and roughly $875 a year (about $73 a month) to start, declining as the balance falls. Both are lower than FHA's equivalent mortgage-insurance charges.