Everything You Need to Know About the USDA Rural Loan (And How It Compares to FHA and Conventional Loans)

Lorenzo Hines
Jun 23
2 min read

If you’re dreaming of buying a home outside the city but aren’t sure how to afford it, the USDA Rural Development Loan might be the opportunity you’ve been waiting for. Backed by the U.S. Department of Agriculture, this mortgage option is designed to help low- to moderate-income buyers purchase homes in eligible rural and suburban areas—with no down payment required.

Let’s break down what a USDA loan is, how it works, who qualifies, and how it compares to more common loans like FHA and Conventional.

What Is a USDA Rural Loan?

A USDA loan is a government-backed mortgage designed to help people buy homes in rural and suburban areas. It’s officially known as the USDA Rural Development Guaranteed Housing Loan Program and is aimed at helping those with lower incomes access safe, affordable housing.

One of the most attractive features?0% down payment. Yes—no money down.

USDA Loan Qualifications

To qualify, both you and the property need to meet certain criteria.

Borrower Requirements:

U.S. citizen or legal permanent resident.
Stable income and employment history.
Must meet income limits (typically no more than 115% of the area median income).
Credit score of 640+ preferred (some flexibility depending on lender).
Must use the home as a primary residence.

Property Requirements:

Must be located in a USDA-eligible rural or suburban area.
Must be a single-family home (some condos or manufactured homes may qualify).
The home must meet minimum property standards set by the USDA.

How Do You Know If a Home Qualifies?

You can easily check the property eligibility by entering the address into the official USDA eligibility map:🔗 https://eligibility.sc.egov.usda.gov

In many cases, smaller towns, suburban communities, and outer edges of cities may qualify—even if they don’t feel very “rural.”

USDA vs. FHA vs. Conventional Loans

Feature	USDA Loan	FHA Loan	Conventional Loan
Down Payment	0%	3.5%	3%–20%
Credit Score	640+ (flexible)	580+ (with 3.5% down)	620+
Mortgage Insurance	Yes (monthly & upfront)	Yes (MIP)	Yes (PMI if < 20% down)
Income Limits	Yes (varies by area)	No	No
Location Restrictions	Yes (rural/suburban only)	No	No
Property Use	Primary residence only	Primary residence only	Primary, second, investment

Is a USDA Loan Right for You?

A USDA loan is a great option if:

You want zero down payment.
You’re buying in a rural or suburban area.
Your income fits within the USDA limits.
You're seeking affordable monthly payments.

If you’re buying in a city, have more cash for a down payment, or want to buy an investment property, FHA or Conventional may be a better fit.

Final Thoughts

The USDA Rural Loan is one of the most affordable paths to homeownership, especially for buyers who meet the location and income criteria. If you’re shopping outside of major metro areas, this is a loan worth considering.

Ready to see if you qualify for a USDA loan or want help exploring your options?Let’s connect. I’ll guide you through the process and connect you with trusted lenders who know how to get USDA loans closed smoothly.