Loan Types / USDA

USDA Loan Calculator

USDA loans offer zero down payment in eligible rural and many suburban areas. Estimate your payment with the upfront and annual guarantee fee.

How USDA loans work

• Down payment: zero for eligible buyers.
• Guarantee fee: 1% upfront (usually financed) plus 0.35% per year.
• Location: the property must be in a USDA-eligible area, which includes many suburbs.
• Income: household income limits apply by area and family size.

Who USDA tends to fit

Buyers in eligible areas who want to keep cash in the bank often choose USDA for its zero-down structure and low monthly fee. The main gates are location and income limits, which a loan officer checks quickly.

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The two eligibility tests: property and income

USDA financing requires passing both tests. Failing either one ends the path regardless of how strong the rest of the file is.

Property location. The address has to fall inside a designated eligible rural area. The map is broader than the word rural suggests — many outer suburbs and small towns adjacent to metro areas qualify. Eligibility is checked by exact address, because boundaries can run down the middle of a street.

Household income. The income test counts adjusted household income against a limit that varies by county and household size. It is not the same figure as the qualifying income used to calculate your DTI. It includes income from adults in the household who are not on the loan, which surprises multi-generational households in particular.

The guarantee fee and annual fee

USDA loans carry no down payment requirement, and instead carry two fees. An upfront guarantee fee is charged at closing and is normally financed into the loan balance rather than paid in cash. An annual fee is calculated on the balance and collected monthly inside the payment.

The practical effect is that a zero-down USDA loan can start with a balance slightly above the purchase price. On a $280,000 home, financing the upfront fee puts the starting balance modestly higher, which is worth seeing before closing rather than at the table.

How USDA compares to the other low-down options

For a buyer inside both the map and the income limit, the zero down payment is the largest advantage available in standard financing. For a buyer above the income limit or outside the map, the comparison usually comes down to FHA against a low-down conventional loan.

Frequently asked questions

Does USDA require a down payment?

No. Eligible buyers can finance the full price with a 1% upfront guarantee fee and a 0.35% annual fee.

Are there income limits for USDA?

Yes. Household income must fall under the limit for your area and family size, and the property must be in an eligible location.

Is USDA only for farms?

No. Many suburban neighborhoods qualify. Check the property address for eligibility.

How is a USDA payment calculated?

Set Rural property to Yes and choose USDA in the calculator to estimate principal, interest, the guarantee fee, taxes, and insurance.

Does my property have to be truly rural for a USDA loan?

The eligible map is broader than the word rural implies and includes many outer suburbs and small towns near metro areas. Eligibility is verified by exact address because boundaries can split a street.

Whose income counts toward the USDA income limit?

The household income test counts adjusted income for the household, including adults who are not on the loan. That is a different figure from the qualifying income used for your debt-to-income ratio.

If USDA is zero down, what does it cost instead?

An upfront guarantee fee charged at closing, normally financed into the balance, plus an annual fee calculated on the balance and collected monthly inside the payment.