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. 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.