USDA Loans

Clifton Arrington LO > Services > Mortgage > USDA Loans

USDA Loans:

A USDA loan is a government-backed, zero-down-payment mortgage designed for low-to-moderate-income buyers purchasing homes in designated rural or suburban areas. Backed by the U.S. Department of Agriculture, these loans offer low interest rates and no private mortgage insurance (PMI), making homeownership more affordable.

Key Aspects of USDA Loans:

  • No Down Payment: 100% financing is available, meaning no money down is required.
  • Location Restrictions: The property must be located in a USDA-eligible rural or suburban area (generally population under 35,000).
  • Income Limits: Household income cannot exceed 115% of the median area income.
  • Primary Residence Only: These loans cannot be used for investment properties or second homes.
  • Credit Requirements: While flexible, lenders often look for a credit score of 620 or higher.
  • Fees: There is an upfront guarantee fee (1% of the loan amount) and an annual fee (0.35% of the loan balance), which can be financed. 

Two Main Types of USDA Loans:

    1. Guaranteed Loan: The most common type, where the USDA guarantees loans made by private lenders.
    2. Direct Loan: Provided directly by the USDA for very-low-income borrowers. 

Frequently Asked Questions

Find answers to common questions below

A1: A USDA loan is a government-backed mortgage with zero down payment, designed for low-to-moderate-income buyers purchasing homes in designated rural or suburban areas. It is backed by the U.S. Department of Agriculture and offers low interest rates and no private mortgage insurance (PMI).
A2: USDA loans are ideal for low-to-moderate-income buyers looking to purchase a home in rural or suburban areas. These loans make homeownership more affordable due to their low interest rates and the absence of private mortgage insurance.
A3: The benefits of a USDA loan include zero down payment, low interest rates, and no requirement for private mortgage insurance (PMI). These features help make homeownership more accessible and affordable for eligible buyers.
A4: The property must be located in a USDA-eligible rural or suburban area, generally with a population under 35,000, to qualify for a USDA loan.
A5: Household income for USDA loan applicants cannot exceed 115% of the median area income.
A6: No, USDA loans are intended for primary residences only and cannot be used for investment properties or second homes.
A7: While USDA loans have flexible credit requirements, lenders often look for a credit score of 620 or higher.
A8: USDA loans have an upfront guarantee fee of 1% of the loan amount and an annual fee of 0.35% of the loan balance, which can be financed.
A9: The two main types of USDA loans are Guaranteed Loans, where the USDA guarantees loans made by private lenders, and Direct Loans, which are provided directly by the USDA for very-low-income borrowers.
A10: Clifton Arrington LO is located in Houston-Kingwood.
A11: You can contact Clifton Arrington LO by email at clifton@arringtonloans.com or by phone at 408-460-1706.