One of the most appealing features of USDA loans is that they do not require a down payment, allowing eligible buyers to finance up to 100% of the home's purchase price.
Typically, USDA loans come with interest rates that are competitive or lower than conventional loan rates, making them more affordable for borrowers.
While USDA loans require mortgage insurance (referred to as a guarantee fee), the rates are typically lower than those for private mortgage insurance (PMI) required in conventional loans or the mortgage insurance premiums (MIP) for FHA loans. The guarantee fee includes an upfront fee at closing and an annual fee that's added to the monthly payment.
The USDA is more lenient regarding credit scores than conventional lenders. While the credit requirements can vary by lender, the USDA does not set a minimum credit score, though a score of 640 or higher is often recommended for streamlined processing.
Eligibility for a USDA loan is subject to income limits, which vary by region and are based on the median incomes of the area. Generally, your household income cannot exceed 115% of the median household income for the area.
Homes financed with USDA loans must be located in eligible rural areas as defined by the USDA. Buyers can check the USDA's website to see if a property is in an eligible area.
Information and/or dates are subject to change without notice. All loans subject to credit approval.
CA Department of Real Estate #01505999