What does "U.S. Department of Agriculture (USDA) loan" mean?

To qualify for a USDA mortgage, borrowers must have a household income at or below 115% of the median income for their area. The property must be located in an eligible rural area, and the borrower must demonstrate a credit score of at least 640. Additionally, a debt-to-income ratio of 41% is generally required, although exceptions may apply.

USDA mortgage loan rates vary based on individual lender policies, credit scores, and loan terms. Contact lenders for the most accurate and current rates.

One disadvantage of a USDA loan is the income limit, which is typically set at 115% of the median income for the area. This can restrict eligibility for higher earners who might otherwise qualify for a mortgage. Additionally, USDA loans require mortgage insurance, which increases monthly payments.

The mortgage funded by the United States Department of Agriculture is the USDA loan. This government-backed mortgage is designed for low- to middle-income borrowers in eligible rural areas and often allows for no down payment with competitive interest rates.