What You Need to Know About Getting a USDA Loan

Are you planning to apply for USDA loans? Here are things you need to know about. First, USDA loans are backed by the U.S. Department of Agriculture. Second, this type of loan is part of the department’s Rural Development Guaranteed Housing Loan program that is available for individuals who have low-to-average income. Finally, a USDA loan has no down payment and below-mortgage rates.

So what are the current requirements and rates?

The Requirements

The first thing is that the home you’re eyeing should be in a rural area where the population is less than 20,000.

Next, you need to meet the monthly income caps, which means you shouldn’t make more than 15 percent above the local median income.

Third, the property should be your primary residence.

It’s true that USDA loan requirements are simple, but they will also look into your repayment ability. That said, you need to have a steady income that you will prove through your tax returns. You also need to have a FICO credit score of at least 640 and a 41 percent less debt-to-income ratio.

The Rates

The rates for a USDA loan are lower than conventional fixed mortgage rates. With that, you can look forward to more affordable rates compared to other loans, such as FHA.


If you’re looking for a house loan that doesn’t require a down payment, then you should go for the USDA. This is because the FHA requires a 3.5 percent down payment. However, it doesn’t limit your location or income as it has more lenient credit requirements.

The right loan will depend on your financial situation and where you plan to buy a property.

How It Works

A USDA loan works like any other mortgage, but it’s not a direct loan from the government despite being backed by the U.S. Department of Agriculture. You can get a USDA loan from mainstream lenders, which means you will need to get a pre-approval and qualify for it—like how home loans work, too!

One of the differences is that your application will be sent to the USDA for approval, which takes up to three weeks.

The Mortgage Insurance (MI)

The thing with USDA loans is that it doesn’t require a down payment, but it requires MI. This is because the USDA guarantees their mortgage lenders that they’re protected when borrowers fail to pay, and to do that, the USDA charges homeowner-paid mortgage insurance premiums. So if you’re getting this loan, you need to be prepared to get the MI. Otherwise, you won’t be allowed to get a USDA loan.


A USDA loan is a great loan choice, but you need to be 100 percent sure that you’re qualified to get it. Navigating a USDA loan can be challenging, confusing, and overwhelming. You don’t have to do it all by yourself. Seek professional help to ensure you’re getting the right type of loan for your current situation. Here at ACB Mortgage Solutions, we can assist you with your USDA home loan application. Schedule an appointment with us today.

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