The U.S. Department of Agriculture (USDA) offers guaranteed home loans for low- or moderate-income individuals and families looking to purchase homes in rural areas of the United States. These USDA mortgage loans offer more favorable terms than many conventional mortgages, allowing more people the opportunity to purchase their own homes.
Who Can Apply for USDA Mortgages?
Several types of USDA mortgages are available, with the most popular being the Single Family Housing Guaranteed Loan Program. Individuals must meet a few requirements to apply for the USDA Single Family Housing Guaranteed Loan Program. The main eligibility requirements are:
- Meet income-eligibility (cannot exceed 115% of median household income).
- Agree to occupy the dwelling as their primary residence personally.
- Be a U.S. Citizen, U.S. non-citizen national, or Qualified Alien.
Applicants must purchase a home in an eligible rural area to apply for a USDA loan. The USDA loan program is aimed specifically at the development of rural areas. Borrowers cannot buy a home outside the eligible rural areas determined by the USDA.
Use the official USDA tool to check the eligibility of any property.
Additional requirements for screening applicants include reasonable credit history and the inability to obtain reasonable funding elsewhere. USDA home loan applicants purchasing their first home are also prioritized. Other criteria may apply depending on the number of applicants versus the available funding.
Characteristics of a USDA Mortgage
USDA mortgages are given to individuals or families to purchase, build, repair, or relocate a home in a rural area. Although there are some restrictions on the home type, these tend to be highly flexible to accommodate many different living situations.
Borrowers utilizing USDA loans do not face pre-set loan limits. Instead, the loans will not exceed the appraised value of the home.
Plus, interest rates for USDA mortgages are some of the lowest available, offering below-market interest rates because their government guarantee protects lenders against loss. Mortgage programs like the FHA and conventional loans can average around 0.5%-0.75% higher than USDA rates.
USDA home loans can also be issued with no money down to borrowers who qualify.
Furthermore, for mortgage insurance, borrowers taking out a USDA home loan do not purchase PMI; they pay guarantee fees that act as mortgage insurance.
All USDA loans are amortized as 30-year fixed-rate loans. There are no variable-rate or adjustable-rate USDA mortgage options or short-term fixed-rate loan options.
USDA Home Loans vs. Other Loan Types
USDA loans differ from other mortgage types, including FHA, conventional, and VA loans. Significant differences exist in down payment requirements, credit requirements, interest rates, and loan terms.
USDA Loans vs. FHA Loans
Both FHA loans and USDA mortgages are not considered conventional mortgages. USDA and FHA loans offer more options to low-income borrowers, depending on where they purchase a home.
Federal Housing Administration (FHA) loans have a down payment as low as 3.5%. These loans do not offer a zero-down payment option. Although some USDA mortgage borrowers may be required to pay a down payment, many are offered a 100% loan with the option to make a down payment.
FHA mortgage insurance also tends to be higher than the associated guarantee fees with USDA loans. Moreover, the USDA offers loans to borrowers with lower credit scores.
USDA Mortgages vs. Conventional Mortgages
Conventional mortgages are offered through most mortgage lenders. Unlike USDA mortgages, conventional mortgages often have higher credit requirements and down payments. The required down payment for a conventional mortgage may be as high as 20% of the home’s purchase price.
There are no location requirements for homes bought with a conventional mortgage, nor are there any income caps for the borrower. Borrowers taking out a conventional mortgage are also not required to live in the home as their primary residence.
Despite the flexibility of a conventional mortgage, buyers who qualify for USDA loans may not necessarily qualify for a conventional mortgage and vice versa. These two loan types generally do not intersect.
USDA Loans in Florida
Marimark Mortgage, based in Tampa, Florida, specializes in conventional mortgages, such as the USDA loan. Other than VA loans, the USDA loan is the only 100% no down payment option in Florida.
Here is what you need to know about the requirements for USDA home loans in Florida:
- A minimum of a 620 credit score is required.
- A solid two-year work history with proof of income.
- A household with members total income not surpassing the maximum amount (the maximum amount varies per county).
- A single-family home located in an USDA eligible location.
Marimark Mortgage
Marimark Mortgage is based in Tampa, Florida, and serves the mortgage needs of homebuyers, homeowners, and investors in Florida, Virginia, and Pennsylvania.
We specialize in conventional home mortgages, FHA, VA, and USDA mortgage options, refinance loans, and reverse mortgages. We have worked extensively with cash-out refinancing and help clients to lower their monthly mortgage payments.
To get started with a mortgage to buy your next home, please fill out our Quick Mortgage Application, or contact us directly.

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