USDA Loan.

In plain English

A USDA loan is a mortgage backed by the U.S. Department of Agriculture's Rural Development program to help low- and moderate-income people buy homes in eligible rural and certain suburban areas. Like a VA loan, it can require no down payment, which makes it one of the few zero-down options available to civilians. To qualify, the home must sit in a USDA-eligible location and your household income must fall under a limit that varies by area and family size. Borrowers pay an upfront guarantee fee and an annual fee, which work somewhat like mortgage insurance but are usually cheaper than FHA insurance.

01Why it matters

If you are buying in a qualifying area and your income is modest, a USDA loan can let you become a homeowner without a down payment, which is the biggest barrier for most first-time buyers. The income and location limits make eligibility the first thing to check.

02The math, step by step

A family earning under their area's income cap buys a $220,000 home in a USDA-eligible town with no down payment. As of 2026, the upfront guarantee fee was 1.00 percent of the loan amount (about $2,200 here, which they roll into the loan), plus an annual fee of 0.35 percent of the unpaid balance built into their monthly payment.

03What this is NOT

04Receipts

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