A USDA loan is a government-backed mortgage designed to help low-to-moderate income borrowers purchase homes in eligible rural and suburban areas. These loans are part of the U.S. Department of Agriculture’s Rural Development program and are meant to promote homeownership in less densely populated communities.
USDA loans offer 100% financing, meaning no down payment is required, and they typically come with below-market interest rates and reduced mortgage insurance costs. To qualify, both the property and the borrower must meet certain criteria—income limits based on location and household size, and the home must be located in a USDA-eligible area.
Because they’re guaranteed by the USDA, these loans pose less risk to lenders, making them an attractive option for eligible homebuyers who may not have a large down payment saved up.