What we verified in “USDA loan: no down payment in rural areas”

Statements and where we checked them

The statements with rules, figures or dates, with the exact place in the source and the date we checked them.

1. According to the CFPB, the U.S. Department of Agriculture (USDA) offers a program similar to FHA and VA for low- and moderate-income borrowers in rural areas; USDA loans can be a good option for borrowers with little savings, offer zero down payments and are usually cheaper than FHA loans; borrowers pay an upfront fee and ongoing mortgage insurance premiums to USDA, and mortgage insurance is required on all USDA loans.

   Sources 1 · Special loan programs, 'USDA loan (or rural development loan)': 'The US Department of Agriculture offers a similar program to the FHA and VA, designed for low- and moderate-income borrowers in rural areas'; 'USDA loans can be a good option for borrowers who have little available savings'; 'They offer zero down payments and are usually cheaper than FHA loans'; 'Borrowers will pay an upfront fee as well as ongoing mortgage insurance premiums to the USDA'; 'Mortgage insurance is required by all USDA loans' · Checked October 17, 2026

2. According to the CFPB, the USDA program is similar to FHA's but typically cheaper; you pay for the insurance at closing and as part of your monthly payment; and you can roll the upfront part into the loan instead of paying it out of pocket, but that increases the loan amount and the overall cost.

   Sources 2 · What is mortgage insurance and how does it work? (last reviewed Aug. 28, 2026), 'U.S. Department of Agriculture (USDA) loan': 'the program is similar to the Federal Housing Administration, but typically cheaper'; 'You pay for the insurance both at closing and as part of your monthly payment'; 'doing so increases both your loan amount and your overall costs' · Checked October 17, 2026

3. Under the guaranteed program's regulation (7 CFR §3555.103), the loan may not exceed the lesser of the market value set by an appraisal that meets the agency's requirements plus the upfront guarantee fee, or the purchase price plus eligible acquisition costs.

   Sources 6 · 7 CFR §3555.103: 'The amount of the loan must not exceed the lesser of'; 'The market value of the property as determined by an appraisal that meets Agency requirements plus the amount of the up-front loan guarantee fee'; 'The total of the purchase price and all eligible acquisition costs' · Checked October 17, 2026

4. Under the regulation (7 CFR §3555.101), the loan must be used to acquire a new or existing home that will be the applicant's principal residence; it can also cover, among other things, repairs at purchase, essential household equipment conveyed with the home, energy-saving measures, and reasonable and customary costs of getting the loan, such as title, transfer taxes and recording fees, appraisal and inspection, homeownership education, the upfront guarantee fee and reasonable closing costs; costs paid by the seller or another third party cannot be included in the loan amount.

   Sources 4 · 7 CFR §3555.101(a)–(b): 'Loan funds must be used to acquire a new or existing dwelling to be used by the applicant as a principal residence'; 'The cost of repairs associated with the acquisition of an existing dwelling'; 'Purchase and installation of energy-saving measures'; 'Title exam, title clearance and title insurance'; 'Transfer taxes and recordation fees'; 'Homeownership education.'; 'The amount of the loan up-front guarantee fee'; 'the amount of the costs paid by the seller or other third party may not be included in the loan amount to be guaranteed' · Checked October 17, 2026

5. Under the regulation (7 CFR §3555.102), USDA will not guarantee a loan to buy an existing manufactured home (with exceptions), land or buildings used principally for income-producing purposes, or buildings designed for a business; nor if the seller or another interested third party contributes more than 6 percent of the sales price toward financing costs, closing costs, escrow, furniture or other giveaways, unless the agency provides otherwise.

   Sources 5 · 7 CFR §3555.102: 'Purchase of an existing manufactured home'; 'Purchase or improvement of land or buildings that are typically used principally for income-producing purposes'; 'designed to accommodate a business or income-producing enterprise'; 'contributes more than 6 percent, unless otherwise provided by the Agency, of the property's sales price' · Checked October 17, 2026

6. Under the regulation (7 CFR §3555.104), the interest rate is fixed for the life of the loan and negotiated between lender and borrower; the term may not exceed 30 years; adjustable-rate, balloon and prepayment-penalty mortgages are ineligible; payments are monthly; and the note cannot charge interest on interest.

   Sources 7 · 7 CFR §3555.104: 'Is fixed over the term of the loan'; 'Shall be negotiated between the lender and the borrower'; 'The term of the loan may not exceed 30 years'; 'Adjustable rate mortgages, balloon term mortgages or mortgages requiring prepayment penalties are ineligible terms'; 'Amortized payments will be due and payable monthly'; 'The loan note must not provide for interest on interest' · Checked October 17, 2026

7. Under the regulation (7 CFR §3555.107), approved lenders must process loans with Rural Development's automated systems, and loans the system does not accept are manually underwritten; the lender must supply a current appraisal, valid for 120 days unless the agency says otherwise; the conditional commitment expires 90 days after it is issued, except for new construction; when funds run short, the agency limits loans to first-time homebuyers and veterans; and the lender must request the guarantee within 30 days of closing.

   Sources 8 · 7 CFR §3555.107(a)–(f) and (i): 'When there is a shortage of funds, the Agency will limit SFHGLP loans to first-time homebuyers or veterans'; 'Approved lenders are required to process SFHGLP loans using Rural Development 's automated systems'; 'require further review and manual underwriting by the lender'; 'The validity period of an appraisal will be 120 days'; 'The conditional commitment will expire in 90 days from issuance, unless new construction is involved'; 'Within 30 days of loan closing, the lender must request issuance of a loan guarantee' · Checked October 17, 2026

8. Under the regulation (7 CFR §3555.107(g)–(h)), the lender pays a nonrefundable upfront guarantee fee, which it may pass on to the borrower and which may not exceed 3.5 percent of the loan; the current fee may change periodically; and the agency may charge an annual fee of no more than 0.5 percent of the average annual scheduled unpaid balance for the life of the loan, which may also be passed on to the borrower.

   Sources 8 · 7 CFR §3555.107(g)–(h): 'The lender must pay a nonrefundable up-front guarantee fee, the cost of which may be passed on to the borrower'; 'The up-front guarantee fee will not exceed 3.5 percent of the principal obligation'; 'may change periodically'; 'not to exceed 0.5 percent of the average annual scheduled unpaid principal balance of the loan for the life of the loan'; 'The annual fee may be passed on to the borrower by the lender' · Checked October 17, 2026

9. According to USDA Rural Development's notice for fiscal year 2027, which begins October 1, 2026 and ends September 30, 2027, the upfront guarantee fee is 1.00 percent and the annual fee .35 percent for both purchases and refinances; at the start of each fiscal year the program runs out of funds for a short period, about one week, and during that time USDA issues conditional commitments 'subject to the availability of commitment authority'.

   Sources 9 · Fiscal Year 2027 Conditional Commitment Notice (September 16, 2026): 'FY 2027 begins October 1, 2026, and ends at the close of business on September 30, 2027'; 'an upfront guarantee fee of 1.00 percent and an annual fee of .35 percent apply to both purchase and refinance transactions'; 'the guaranteed loan program lacks available funds for a short period of time – approximately one week'; 'subject to the availability of commitment authority' · Checked October 17, 2026

10. Under the regulation (7 CFR §3555.151(a)–(f)), at loan approval the household's adjusted income must not exceed the moderate income limit; applicants must provide acceptable evidence that they are U.S. citizens, U.S. non-citizen nationals or qualified aliens as defined in §3555.10; they must agree and be able to occupy the home as their principal residence, and USDA will not guarantee investment properties or temporary housing; the home must be modest, decent, safe and sanitary; current homeowners may qualify only if they meet conditions such as their current home no longer meeting their needs and lacking resources to buy without the guarantee; and applicants must have the legal capacity to take on the loan.

    Sources 10 · 7 CFR §3555.151(a)–(f): 'the household's adjusted income must not exceed the applicable moderate income limit'; 'Applicants must provide evidence acceptable to the Agency of their status as United States citizens, U.S. non-citizen nationals, or qualified aliens, as defined in § 3555.10'; 'Applicants must agree and have the ability to occupy the dwelling as their principal residence'; 'Rural Development will not guarantee loans for investment properties, or temporary, short-term housing'; 'The dwelling must be modest, decent, safe, and sanitary'; 'The current home no longer adequately meets the applicants' needs'; 'The applicants are without sufficient resources or credit to obtain the dwelling on their own without the guarantee'; 'Applicants must have the legal capacity to incur the loan obligation' · Checked October 17, 2026

11. Under the regulation (7 CFR §3555.151(h)), USDA uses two ratios: principal, interest, taxes and insurance (PITI), plus association dues, the annual fee and other assessments, should not exceed 29 percent of repayment income, and PITI plus monthly debts should not exceed 41 percent; they can be exceeded with compensating factors such as a credit score of 680 or higher, a minimal increase over current rent, the ability to save or continuous employment; and an applicant who falls short can add other eligible household members to the application.

    Sources 10 · 7 CFR §3555.151(h): 'does not exceed 29 percent of the applicant's repayment income'; 'does not exceed 41 percent of the applicant's repayment income'; 'The repayment ratio may exceed the percentage in paragraph (h)(1) of this section when certain compensating factors exist'; 'A credit score at an acceptable level of 680 or higher for any applicants'; 'the current rent payment is comparable to the proposed mortgage loan payment'; 'The demonstrated ability to accumulate savings and cash reserves post loan closing'; 'Continuous employment with a current primary employer'; 'the applicant can increase repayment ability by having other eligible household members join the application' · Checked October 17, 2026

12. Under the regulation (7 CFR §3555.151(i)), applicants generally must have a verifiable credit history showing ability and willingness to pay, with an acceptable credit score; on manually underwritten loans, signs of significant derogatory credit, such as a foreclosure or bankruptcy in the last 36 months or a rent or mortgage payment 30 or more days late in the last 12 months, require further review; applicants without an established credit history can show willingness to pay by other methods, such as a non-traditional mortgage credit report or several independent trade references; and lenders are encouraged to offer homeownership counseling and may require it of first-time homebuyers.

    Sources 10 · 7 CFR §3555.151(i): 'Applicants generally must have a verifiable credit history'; 'as evidenced by an acceptable credit score'; 'A foreclosure that has been completed in the 36 months prior to application'; 'One rent or mortgage payment paid 30 or more days late within the last 12 months prior to application'; 'For applicants without an established credit history, alternative methods may be used'; 'a non-traditional mortgage credit report or multiple independent verifications of trade references'; 'Lenders are encouraged to offer or provide for home ownership counseling'; 'Lenders may require first-time homebuyers to undergo such counseling' · Checked October 17, 2026

13. Under the regulation (7 CFR §3555.10), 'moderate income' is the greatest of 115 percent of U.S. median family income, the average of the statewide and state non-metro median family income, and 115/80ths of the area low-income limit adjusted for household size; the 'household' is everyone routinely living in the home as their principal residence, except live-in aides and foster children or adults; adjusted annual income includes income from all household members who live or will live there; and the definition of 'rural area' is in section 520 of the Housing Act of 1949.

    Sources 3 · 7 CFR §3555.10, Definitions: 'Moderate income . The greater of'; '115 percent of the U.S. median family income'; 'The average of the state-wide and state non-metro median family income'; '115/80ths of the area low-income limit adjusted for household size'; 'All persons routinely living in the dwelling as principal residence , except for live-in aides, foster children, and foster adults'; 'Income from all household members who live or propose to live in the dwelling'; 'is found in section 520 of the Housing Act of 1949' · Checked October 17, 2026

14. Under the regulation (7 CFR §3555.152), repayment income is the stable income of the parties to the note, reviewed for at least the past 2 years and expected to continue for at least 3; annual income is the income of all household members, whether or not they sign the note, and the lender verifies each adult household member's income for the previous 2 years; excluded, among other things, are the earned income of people under 18 who are not applicants or spouses, gifts and other temporary income, and the earned income tax credit; and deductions are subtracted, such as one for each child under 18 and reasonable care expenses for children 12 or under that let someone work.

    Sources 11 · 7 CFR §3555.152(a)–(c): 'Repayment income is the amount of adequate and stable income from all sources that parties to the promissory note are expected to receive'; 'for at least the past 2 years'; 'for at least the next 3 years'; 'Annual income is the income of all household members, regardless of whether they will be parties to the promissory note'; 'Lenders will verify the income for each adult household member for the previous 2 years'; 'Earned income of persons under the age of 18 unless they are an applicant or a spouse of a member of the household'; 'Temporary, nonrecurring, or sporadic income (including gifts)'; 'Any earned income tax credit'; 'A deduction of reasonable expenses for the care of a child 12 years of age or under' · Checked October 17, 2026

15. Under the regulation (7 CFR §3555.201), USDA only guarantees loans in areas Rural Development designates as rural; if an area stops being rural, existing conditional commitments are honored and requests with a complete application and purchase contract before the change may be approved; the site must be typical in size for the area, cannot include land or buildings used principally to produce income, must have direct access from an all-weather street or road, and must have adequate water and wastewater service.

    Sources 12 · 7 CFR §3555.201: 'Rural Development will only guarantee loans made in rural areas designated as rural by Rural Development'; 'Existing conditional commitments in the former rural area will be honored'; 'Loan requests where the application and purchase contract was complete prior to the area designation change may be approved'; 'The site size must be typical for the area'; 'property used primarily for agriculture, farming or commercial enterprise is ineligible'; 'The site must be contiguous to and have direct access from a street, road, or driveway'; 'adequate utilities and water and wastewater disposal systems' · Checked October 17, 2026

16. Under the regulation (7 CFR §3555.202), an existing home must be structurally sound, functionally adequate, in good repair (or put in good repair with loan funds) and have adequate and safe electrical, heating, plumbing, water and wastewater systems; and a new home must be built from certified plans and meet or exceed the International Energy Conservation Code (IECC) in effect.

    Sources 13 · 7 CFR §3555.202(a)–(b): 'New dwellings must be constructed in accordance with certified plans and specifications'; 'International Energy Conservation Code (IECC)'; 'Be structurally sound'; 'Be functionally adequate'; 'Be in good repair, or to be placed in good repair with loan funds'; 'Have adequate and safe electrical, heating, plumbing, water, and wastewater disposal systems' · Checked October 17, 2026

17. According to USDA's eligibility site, the site evaluates the likelihood that a potential applicant would be eligible; for many USDA loans, household income must meet certain guidelines and the home must be in an eligible rural area as defined by USDA; the site has a section to check whether a property is in an eligible area and another to assess a household's potential eligibility; besides the guaranteed program, USDA has a Single Family Housing Direct program; and to apply for a guaranteed loan you go to one of the program's approved lenders.

    Sources 14 · USDA Income and Property Eligibility Site: 'This site is used to evaluate the likelihood that a potential applicant would be eligible for program assistance'; 'household income must meet certain guidelines'; 'the home to be purchased must be located in an eligible rural area as defined by USDA'; 'select the Property Eligibility Program link'; 'To assess potential eligibility of an applicant/household'; 'Single Family Housing Direct'; 'please reach out to any of the program‘s approved lenders' · Checked October 17, 2026

18. Under the regulation (7 CFR §3555.10), 'qualified alien' takes the definition in the 1996 law known as PRWORA (8 U.S.C. §1641); under that law it includes, among others, lawful permanent residents, people granted asylum, refugees, people paroled into the U.S. under section 212(d)(5) for at least 1 year, people whose deportation is being withheld, Cuban and Haitian entrants, people lawfully residing in the U.S. under a Compact of Free Association and, in certain cases, people who were battered.

    Sources 15 · 8 U.S.C. §1641(b)–(c): 'an alien who is lawfully admitted for permanent residence under the Immigration and Nationality Act'; 'an alien who is granted asylum'; 'a refugee who is admitted to the United States'; 'an alien who is paroled into the United States under section 212(d)(5) of such Act'; 'for a period of at least 1 year'; 'an alien whose deportation is being withheld'; 'an alien who is a Cuban and Haitian entrant'; 'in accordance with a Compact of Free Association'; 'Treatment of certain battered aliens as qualified aliens' · Checked October 17, 2026

19. Under the guaranteed program's regulation (7 CFR §3555.10), the term 'qualified alien' refers to the definition in section 401 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), at 8 U.S.C. 1641.

    Sources 3 · 7 CFR §3555.10, Definitions: 'Qualified alien . See the definition of the term under Section 401 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA)' · Checked October 17, 2026

20. According to the Justice Department's Executive Office for Immigration Review (EOIR), only certain people can represent you, including validly licensed attorneys and accredited representatives; notarios, document preparers, immigration consultants and travel agents are not allowed to practice law, give you legal advice or tell you whether you are eligible for immigration relief.

    Sources 16 · Can Someone Represent You Before EOIR?: 'Those include validly licensed attorneys and accredited representatives'; 'Notarios , document preparers, immigration consultants, and travel agents are not allowed to practice law'; 'They cannot give you legal advice'; 'tell you if you are eligible for immigration relief' · Checked October 17, 2026

21. According to the CFPB, the Loan Estimate is a three-page form you receive after applying for a mortgage; the lender must provide it within three business days of receiving your application; all lenders use the same standard form, which makes comparing easier; and receiving one does not mean the loan is approved.

    Sources 17 · What is a Loan Estimate? (last reviewed Aug. 9, 2024): 'a three-page form that you receive after applying for a mortgage'; 'within three business days of receiving your application'; 'All lenders are required to use the same standard Loan Estimate form'; 'the lender has not yet approved or denied your loan application' · Checked October 17, 2026

22. According to the CFPB, FHA loans allow down payments as low as 3.5 percent, allow lower credit scores than most conventional loans, and all carry mortgage insurance.

    Sources 18 · FHA loans (page last modified Jun. 30, 2025): 'Allow for down payments as low as 3.5 percent'; 'Allow lower credit scores than most conventional loans'; 'Mortgage insurance is required for all FHA loans' · Checked October 17, 2026

23. According to the CFPB, HUD-approved housing counselors advise on buying a home, renting, defaults and credit, and can offer independent advice about whether a particular set of mortgage loan terms fits your objectives, often at little or no cost.

    Sources 19 · Find a Housing Counselor: 'Housing counselors throughout the country can provide advice on buying a home, renting, defaults, forbearances, foreclosures, and credit issues'; 'whether a particular set of mortgage loan terms is a good fit based on your objectives'; 'often at little or no cost to you' · Checked October 17, 2026