Rural Development
USDA Loans
Zero down payment financing designed to encourage rural and suburban homeownership. One of the best kept secrets in the mortgage industry.
0%
Down Payment
600+
Recommended Score
Required
Property Location Eligibility
Capped
Household Income Limits
The Two Big Rules
USDA loans offer incredible terms, but they come with two strict eligibility requirements that don't apply to other loan types.
1. Location Eligibility
The home must be located in a USDA-designated rural area. However, "rural" is broadly defined. Many small towns and suburban areas outside major cities of Michigan qualify.
2. Income Limits
Your total household income cannot exceed 115% of the median income for the area. This includes the income of everyone living in the house, even if they aren't on the loan.
Benefits of USDA
- True 100% FinancingBuy a home with no money down.
- Extremely Low RatesBecause they are government-backed, USDA rates are highly competitive.
- Cheaper Mortgage InsuranceUSDA charges a guarantee fee, but the monthly cost is significantly cheaper than FHA mortgage insurance.
- Roll in Closing CostsIf the home appraises for more than the purchase price, you can roll your closing costs into the loan.
USDA Loan FAQs
No! The USDA program is not for buying working farms or income-producing land. It is for buying standard single-family residential homes that just happen to be located outside dense urban areas.
USDA requires an upfront guarantee fee of 1% (usually rolled into the loan) and an annual fee of 0.35% (divided by 12 and added to your monthly payment). This is much lower than FHA's 1.75% and 0.55%.
USDA property standards are similar to FHA. The home must be structurally sound, have a working roof, and be safe to inhabit. Outbuildings and extra acreage are allowed, but the value of the home must be primarily residential, not agricultural.