USDA Loans

How USDA Loans Work

At NEXA Mortgage, we want to help you understand how a USDA mortgage loan works. The United States Department of Agriculture (USDA) offers a zero-down payment mortgage program to help low- to moderate-income borrowers buy homes in eligible rural and suburban areas. Unlike conventional loans, USDA loans are government-backed, which means they come with lower interest rates and more flexible qualification requirements. Our role is to help you qualify for a USDA mortgage and structure your loan to best fit your financial situation.

USDA Loan Benefits

USDA loans offer some of the most affordable home financing options available, making homeownership accessible for many buyers in rural and suburban areas. Below are the key benefits of a USDA mortgage:

No Down Payment Required – USDA loans allow 100% financing, meaning eligible buyers don’t need a down payment to purchase a home.

Lower Interest Rates – Because USDA loans are government-backed, they often come with lower interest rates than conventional or FHA loans.

Flexible Credit Requirements – While a credit score of 640 or higher is preferred for automated approval, lower scores may still qualify with manual underwriting.

Low Mortgage Insurance Costs – USDA loans require guarantee fees instead of private mortgage insurance (PMI). The upfront fee is 1% of the loan amount, and the annual fee is 0.35%, which is lower than FHA loans.

No Loan Limits – Unlike FHA and conventional loans, the USDA program does not have a maximum loan limit; instead, loan amounts are based on income eligibility and repayment ability.

Fixed-Rate Loans Only – All USDA loans come with fixed interest rates, meaning your payment stays the same for the life of the loan.

Closing Cost Assistance – Buyers can roll closing costs into the loan or have them covered by the seller, reducing out-of-pocket expenses.

USDA Loan Checklist

Employment Information

Past two years of completed tax returns
Past two years of W-2s, 1099s, or other income statements
One month of the most recent pay stubs
Self-employed borrowers: Three years of tax returns and a year-to-date Profit & Loss Statement

Savings & Asset Information

Past three months full bank statements for all accounts.
Any recent statements from investment accounts (retirement, 410k, mutual funds, etc.).

Personal Information

Driver's License or other official State identification.
Social Security Card.
Any Divorce, Palimony, Alimony Documents.
Green card or work-permit (if applicable).

USDA Loan FAQ

Eligibility & Requirements

Who qualifies for a USDA loan?

USDA loans are available to low- to moderate-income borrowers who meet income limits and purchase homes in eligible rural or suburban areas.

What areas qualify for USDA loans?

USDA loans are designed for rural and some suburban areas. You can check property eligibility on the USDA Eligibility Map.

Are there income limits for USDA loans?

Yes. Income limits vary by location and household size. Typically, your household income must be at or below 115% of the area’s median income.

What is the minimum credit score for a USDA loan?

A credit score of 640 or higher is preferred for automated approval, but borrowers with lower scores may qualify with compensating factors.

Do I need a down payment for a USDA loan?

No! USDA loans offer 100% financing, meaning no down payment is required.

Loan Terms & Property Guidelines

What types of properties can I buy with a USDA loan?

Single-family primary residences in USDA-eligible areas

New or existing homes

Manufactured homes (with lender approval)

Can I use a USDA loan for an investment property or vacation home?

No. USDA loans are only for primary residences—investment properties and vacation homes are not eligible.

Are there loan limits for USDA loans?

No set loan limits, but the loan amount is based on income eligibility and debt-to-income ratios.

Do USDA loans require mortgage insurance?

USDA loans do not have PMI but require a 1% upfront guarantee fee and an annual fee of 0.35% of the loan balance.

Closing Costs & Refinancing

Can closing costs be rolled into a USDA loan?

Yes, USDA loans allow closing costs to be included in the loan amount, reducing upfront out-of-pocket expenses.

Can I refinance a USDA loan?

Yes, the USDA offers streamlined and non-streamlined refinancing options for existing USDA loan holders.

How long does it take to close a USDA loan?

Closing a USDA loan typically takes 30 to 45 days, depending on underwriting and USDA approval times.

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The information provided on this website is for general informational purposes only and does not constitute financial, legal, or mortgage advice. USDA loan guidelines, eligibility requirements, and guarantee fees are subject to change based on federal regulations and lender policies. Loan approval is not guaranteed and is subject to credit approval, verification of income and assets, and property eligibility. NEXA Mortgage is not acting on behalf of or at the direction of the United States Department of Agriculture (USDA) or any government agency. Borrowers are encouraged to consult with a licensed mortgage professional to discuss their specific financial situation and loan options. For the most up-to-date USDA loan requirements and eligibility maps, please visit the USDA Rural Development website.