A USDA mortgage loan is a home financing program backed by the U.S. Department of Agriculture (USDA) designed to promote homeownership in rural and suburban areas. These loans are particularly appealing because they require no down payment, making them an affordable option for low- to moderate-income borrowers who meet specific income and property eligibility requirements.
USDA loans are available in two main forms: direct loans, which are issued directly by the USDA for very low-income borrowers, and guaranteed loans, which are offered by private lenders but backed by the USDA.
They typically offer competitive interest rates and reduced mortgage insurance costs compared to other loan types. To qualify, the property must be in a USDA-defined eligible rural area, and the borrower must fall within income limits based on their household size and location. This program is ideal for those seeking affordable homeownership in less densely populated regions.