What is a USDA Loan?


A USDA Loan, also known as a USDA Rural Development Guaranteed Housing Loan program, is a government-sponsored home loan program provided by the United States Department of Agriculture (USDA) for people who want to purchase, refinance, or renovate homes in rural areas across the country. USDA Loans are designed to assist low and moderate-income families to improve living standards and stimulate economic growth and development in rural communities.




Who Is Eligible for a USDA Loan?

USDA Loans are designed to help low and moderate-income families residing in rural communities become homeowners. To be eligible for a USDA Loan, you must meet certain criteria set by the USDA. Here are the eligibility requirements:

    • The property must be in an eligible rural community as defined by the USDA.
    • You must have an income that is less than or equal to 115% of the median income in the area where the property is located. This percentage may vary depending on location and family size.
    • You must have a credit score of at least 640, and your debt-to-income ratio should not exceed 41%. However, some lenders may consider borrowers with lower credit scores and higher debt-to-income ratios depending on other compensating factors.
    • You must be a US citizen or a permanent resident of the United States.
    • You must have a stable income and must be able to prove that you can afford monthly mortgage payments. 

What Are the Benefits of a USDA Loan?

USDA Loans are a great option for those who want to purchase or refinance homes in rural areas, especially for those who have limited down payment and credit score concerns. One of the main benefits to obtaining a USDA loan is that it requires zero down payment. This means that you can receive 100% financing for your home purchase. USDA loans also offer lower mortgage insurance premiums compared to other home loan programs such as FHA loans. You will also have the benefits of no prepayment penalties, meaning you can pay off your loan earlier without any penalties or fees. The final benefit is that USDA loans have more flexible credit guidelines, making it easier for people with less than perfect credit to qualify.


USDA Loans provide an excellent option for people who want to purchase or refinance homes in rural areas. If you think a USDA Loan could be the right home financing option for you, contact EPIC Mortgage today to discuss your eligibility and how to apply.