USDA loan: requirements, $0 down payment and the eligible area

This is the other government loan with $0 down, and it does not ask whether you served: it asks that the home be in an area the USDA marks as rural and that your income stay under its cap. Here are the two gates and everything else, as the USDA publishes it.

The USDA guaranteed loan (Section 502) is for low- and moderate-income households buying their primary home in eligible rural areas. As with the other government loans, the USDA does not lend you the money: it guarantees 90% of the loan to an approved lender, and that guarantee is what allows 100% financing — $0 down payment.

• There are two USDA programs and they get mixed up. This one, the Guaranteed, is applied for through an approved lender. The other, the Direct, is lent by the USDA itself to lower-income households, through its own offices. This guide covers the Guaranteed, the one almost everyone uses.
• The home must be modest and yours to live in. Single-family homes, condos, townhouses and manufactured homes can qualify; income-producing property cannot. There is no acreage limit.
• There is only one term: 30-year fixed. No 15-year or adjustable-rate version exists in this program. The lender sets the rate, not the USDA.

"Rural" is defined by the USDA's map, not by common sense: whole towns are out, and patches right against a city are in. The only check that counts is the exact address on the USDA's official eligibility site: the map is reviewed and the areas change with the census.

In Miami-Dade and Broward, honestly: the eligible area is the exception, not the rule. Nearly everything urban is out, and what can be in is the rural edges of each county. Before you fall for a home counting on this loan, check its address on the official map — or ask us and we will check it with you.

Your household income cannot exceed 115% of the area median income. And "household" means it: the income of every adult who will live in the home counts, not just the borrower's. It is the surprise most people discover late.

• The exact number depends on your county and household size. The current limits are on the same USDA eligibility site, by county.
• Going over the cap cannot be fixed inside the program. Not with a bigger down payment and not with another lender: it is an eligibility rule, not a price. Over it, your loans are FHA, VA or conventional.
• The program sets no maximum home price. The price is limited by your income (what a lender approves you to pay) and by the appraisal.

The USDA publishes it like this: the program has no credit score requirement. What it does require is that you show willingness and ability to handle debt. In practice, many lenders use 640 as the benchmark to run your file through the USDA's automated approval system; below that, a lender may underwrite it by hand or not work it — that is the lender's rule, not the program's, and it varies from lender to lender.

• Citizenship: U.S. citizen, U.S. non-citizen national, or Qualified Alien.
• Occupancy: the home must be your primary residence.
• The lender approves the loan and the USDA issues the guarantee: there is a government review step that conventional loans do not have.

For the score lenders ask for in practice, see the credit score you actually need.

A USDA loan carries no PMI, but it is not free either: the guarantee is charged in two parts. The rates are announced by fiscal year; the fiscal year 2026 rates (from October 1, 2025) are these:

• Your annual fee is locked at closing, at your fiscal year's rate, even if the USDA later changes it for others.
• Closing costs may be included in the transaction when the appraisal supports it, under the program rules: with $0 down and that, cash to close can be very small — not a guaranteed zero: whatever the appraisal does not support and the seller does not concede stays on you.
• Compare with FHA: its upfront premium is 1.75% and its common annual premium is 0.55%. The USDA's are lower; the trade is that the USDA closes two gates on you (area and income) and FHA does not.

• If the home is in the city, it almost certainly does not. The area gate comes first and it is binary: in or out, with no exception and no appeal that matters.
• If the household earns "too much," it does not either. The 115% cap shuts out households that are normal for any other program.
• The annual fee never comes off inside the loan. Unlike PMI, no 20% milestone switches it off: you leave it only by refinancing into another loan type or selling.
• There is one more review step. The lender approves and the USDA guarantees: closing can take longer than a conventional loan, and not every lender works the program.

And if the USDA does not work for you because of the area, plenty of Miami-Dade and Broward homes do combine with down payment assistance on an FHA or a conventional loan: they are in down payment assistance in Miami-Dade.

• USDA Rural Development, the official page of the Single Family Housing Guaranteed Loan Program (Section 502): 100% financing, the 115% median income cap, no program credit score requirement and the single 30-year fixed term: rd.usda.gov
• USDA Rural Development, the "Upfront Guarantee Fee and Annual Fee" document and the Fiscal Year 2026 conditional commitment notice (September 8, 2025): upfront fee of 1.00% and annual fee of 0.35% of the average scheduled balance: rd.usda.gov
• USDA, the official eligibility site, where each address and each county income limit is checked: eligibility.sc.egov.usda.gov