What is a USDA Rural Development loan?

A USDA loan is a zero-down-payment mortgage backed by the U.S. Department of Agriculture for buyers in eligible rural and suburban areas. There are two main programs: the Guaranteed Loan Program (for moderate-income buyers through approved lenders) and the Direct Loan Program (for low-income buyers directly through USDA). Income limits apply and vary by household size and location. The property must be in a USDA-designated eligible area — you can check eligibility at the USDA property eligibility website. USDA loans require an upfront guarantee fee and an annual fee, but typically have lower mortgage insurance costs than FHA loans.