What Is a USDA Loan?

A USDA home loan is a mortgage that is insured by the US Department of Agriculture. These loans are available to rural homeowners who may not qualify for other types of mortgage loans.

USDA home loans can be used to purchase or refinance a home, and there is no down payment required. There are also no monthly Mortgage Insurance Premiums (MIP), which can save borrowers hundreds of dollars per month.

USDA home loans are available with fixed or adjustable interest rates, and the interest rate is typically lower than what is available from other lenders. Borrowers who have trouble qualifying for a conventional mortgage may find that a USDA home loan is the perfect solution. 

Pros 

• There are flexible requirements.
• The seller can pay closing costs, saving you even more money.
• There's no down payment required.
• No monthly Mortgage Insurance Premiums (MIP), which can save borrowers hundreds of dollars per month.
• USDA home loans are available with fixed or adjustable interest rates, and the interest rate is typically lower than what is available from other lenders.
• USDA loans are available as a refinance option, too.
  
  

Cons

• USDA loans can be used on homes in certain areas.
• There are income limits to qualify. 
• Specific homes qualify for USDA loan (single family, condo, fixer uppers, land) Not duplex homes. 
• It might take longer to approve since the U.S Department of Agriculture must review the application itself.

who qualifies for a usda loan?

USDA home loans may be a good option for borrowers who meet income limits, plan to purchase or refinance a primary residence, and are buying in an eligible rural or suburban area. These loans are often well suited for borrowers who may have difficulty qualifying for a conventional mortgage but are looking for a low down payment option with competitive interest rates.