fbpx Skip nav to main content.

What is a RD/USDA mortgage product?

An RD/USDA mortgage product, or a USDA Rural Development loan, is a home loan offered by the United States Department of Agriculture (USDA) to promote homeownership in eligible rural and suburban areas. These loans are designed to help low to moderate-income borrowers purchase homes in areas designated as rural by the USDA.

Here are some key features of RD/USDA mortgages:

  1. No Down Payment Requirement: One of the most significant benefits of RD/USDA loans is that they typically do not require a down payment. Eligible borrowers can finance up to 100% of the home’s purchase price without a down payment, making homeownership more accessible.
  2. Low Mortgage Insurance: RD/USDA loans have lower mortgage insurance premiums compared to FHA and conventional loans. This can result in lower monthly mortgage payments for borrowers.
  3. Flexible Credit Requirements: While RD/USDA loans have credit score requirements, they may be more lenient than conventional loans. Borrowers with less-than-perfect credit histories may still qualify for an RD/USDA loan, provided they meet other eligibility criteria.
  4. Income Limits: RD/USDA loans have income limits based on the area’s median income. Borrowers must meet these income limits to qualify for an RD/USDA loan. The income limits vary depending on factors such as household size and location.
  5. Property Eligibility: RD/USDA loans are available for properties in eligible rural and suburban areas designated by the USDA. Borrowers can check the USDA’s Property Eligibility Map to determine if a specific property is eligible for financing.
  6. Loan Limits: RD/USDA loans do not have strict loan limits like FHA and conventional loans. Instead, the loan amount is based on the borrower’s income and debt-to-income ratio, as well as the property’s appraised value.

Overall, RD/USDA mortgages provide a valuable financing option for eligible borrowers looking to purchase homes in rural and suburban areas. Borrowers considering an RD/USDA loan should consult with an RD/USDA-approved lender to determine if they meet the eligibility requirements and to explore their financing options.