Mortgages & Creative Financing

USDA Rural Development Loan: The 100% Financing Loan That’s Not “Just for Farmers”

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The USDA rural development loan program was launched in the 1990s. It was recently updated and revamped to better appeal to people trying get into properties that are designated eligible suburban and rural areas by the USDA loan guidelines. In order to qualify for the USDA loan program, the first requirement is that the property is designated eligible by the USDA loan database. It is also worth noting that USDA loans cannot be used for investment properties or vacation homes; this loan is for primary residences only.

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Location of the property is key in qualifying for a USDA loan, and it is determined on a property by property basis according to zip code and county. Qualifying for a USDA loan has very similar requirements to qualifying for a FHA loan. In order to qualify for the USDA loan program, you will be expected to be able to document your current income, have decent credit (as of December 1, 2014, the USDA implemented a minimum credit score of 640), and generally show that you have the financial ability to repay the loan.


Related: The Comprehensive Guide for Financing Your Very First Real Estate Deal

USDA Loans: Very Popular Loans

Until FHA did away with their third party down payment assistance programs, the USDA loan program wasn't all that popular. But when FHA eliminated all third party down payment assistance programs, the USDA loan exploded in popularity. Today, many homeowners who are thinking about buying a home are surprised to learn that many properties qualify for a USDA loan even though they can hardly be considered "rural."

USDA Rural Development Loan Lenders

The USDA rural development loan program is administered through a network of lenders who are USDA approved lenders. Not every lender is USDA approved, and not all lenders have the same level of expertise when it comes to helping you with a USDA loan.

When choosing a lender to work with to get a USDA loan, be sure to shop around so that you not only get a lender that is USDA approved, but also one that has experience and knowledge when it comes to the ins and outs of USDA loans.


Related: The Investor’s Guide to Qualifying for a Conventional Loan

Highlights of the USDA Rural Development Loan Program

  • The USDA loan program works through USDA-approved lenders that lend money that is insured against default by USDA
  • The USDA loan program offers 100% financing with reduced mortgage insurance premiums and is a true no-money-down option when buying a home
  • USDA loans can be used when buying a new home or refinancing an existing mortgage
  • The USDA loan program is not "just for farmers," and many people are able to qualify
  • For full information on eligibility, visit the United States Department of Agriculture’s page here

If you are interested in learning more about the USDA loan program, be sure to speak with a loan officer at a lender that is approved to lend under the USDA loan program and has experience with helping people finance their homes with USDA loans.

Any questions about the USDA rural development loan? Have you used this loan before?

Let me know with a comment!

Joshua Dorkin is a serial entrepreneur, investor, podcaster, publisher, educator, and co-author of How to Invest in Real Estate. He started BiggerPockets to help democratize the real estate investing landscape for himself and others, aiming to make it accessible for everyone, regardless of income or education. Today, BiggerPockets is the premier real estate investing website online with over one million members and reaching over 70 million people with the message of financial freedom through real estate investing. Joshua, along with his wife and three daughters, make their home in Denver, Colorado, and spend any time they can traveling, exploring, and adventuring. Read more about Joshua’s story in 5280 and

    Chris Harjes investor from Asheville, North Carolina
    Replied about 3 years ago
    Probably worth mentioning that this is a primary-residence loan only, and thus not an option for investors (unless you’re house-hopping).
    Allison Leung from Denver, CO
    Replied about 3 years ago
    Chris: Thanks for the comment. Per the USDA website: Applicants must: Agree to personally occupy the dwelling as their primary residence ( I’ve added that info into the article. Thanks for pointing it out!
    Chris Luksha from Jaffrey, New Hampshire
    Replied about 3 years ago
    Thanks for the short post there Josh. I called in on USDA for the sake of refinancing just last week and was told that they do not do refinancing on NON USDA mortgages, but there was a possible other option in the program. Should it pan out I will post and let you know.
    Allison Leung from Denver, CO
    Replied about 3 years ago
    Hey Chris: BP blog editor here. Very interesting — yes, please let us know if that pans out, and we will add a note about that into the article. Thanks!
    Patsy Waldron rental_property_investor from Orlando, FL
    Replied about 3 years ago
    I am so glad to see this post! I have been wondering why the USDA loan is not mentioned more often on BP. My first house, a few years into my first job, was a foreclosure in a small town in Virginia, and I bought it using a USDA loan with zero down. I only had to bring $1,200 to closing- the seller, which was my local bank, paid for most of my closing costs. That loan was a godsend, as grad school debt meant that I would have had to wait YEARS before being able to save enough for a down payment and buy through another program. I applied through a mortgage broker at the local bank, who found a lender in North Carolina (which promptly sold my mortgage to Chase). Anyway- it was a totally painless process, except for the long wait (3 months from accepted offer to closing). I am a big fan of USDA loans personally!
    Samantha N. from Columbus, Ohio
    Replied about 3 years ago
    Is there some way on the USDA website to see exactly what areas of a state or county are eligible rather than having to type in individual addresses of where you might buy?
    Michael Anderson from Baton Rouge, Louisiana
    Replied about 3 years ago
    didn’t know those were still available or unavailable in my case, nice read as the same
    Allison Leung from Denver, CO
    Replied about 3 years ago
    Hi Michael: Yes, the USDA program is currently still open. You can get more information from their website here: Thanks for reading!
    Douglas Skipworth rental_property_investor from Memphis, TN
    Replied about 3 years ago
    Great post, Josh. My mortgage originator friend Rosemarie Fair at Brighton Bank in TN offers this type of loan nationwide! It’s an awesome product.
    Account Closed investor from Billings, Montana
    Replied about 3 years ago
    FYI, the link for the USDA eligibility website listed in this blog is not working…User error on my part?
    Brian Collins from Pendleton, Indiana
    Replied almost 3 years ago
    According to the USDA website, USDA financed loans are usable by for-profit organizations such as LLC’s on multi-family loans that are located in USDA Eligible areas. See below: Rules of use: Am I missing something?