USDA Loans: The Zero Down Payment Option You Might Not Know About
Written by the 4Homes Editorial Team · Reviewed by 4Homes staff · NMLS #2787839
Published March 10, 2026 · Updated March 10, 2026
1 min read
In this article
When people hear "USDA loan," they often picture remote farmland. In reality, the USDA Rural Development loan program covers a surprisingly large portion of the United States, including many suburban areas near major cities. For eligible buyers, it offers one of the best mortgage deals available: 100% financing with competitive rates and lower mortgage insurance costs than FHA.
Eligibility Requirements
USDA loans have two main eligibility requirements: property location and household income. The property must be located in a USDA-designated rural or suburban area, and your total household income cannot exceed 115% of the area median income. You can check both property eligibility and income limits on the USDA's website.
Benefits of USDA Loans
| Zero down payment | Finance 100% of the home's appraised value. |
|---|---|
| Lower guarantee fees | The upfront fee is 1.0% and the annual fee is 0.35%, both lower than FHA premiums. |
| Competitive rates | USDA rates are often comparable to or lower than conventional rates. |
| Flexible credit requirements | While there is no official minimum score, most lenders look for 640+. |
Key Takeaways
- 1USDA loans require zero down payment for eligible properties and buyers
- 2Many suburban areas near major cities qualify as USDA-eligible
- 3Income limits are based on the area median income, not a flat national cap
- 4USDA guarantee fees are lower than FHA mortgage insurance premiums