USDA Loans: Do You Qualify for 0% Down?
Last updated September 2026
Quick answer
A USDA loan offers 0% down financing for moderate-income buyers purchasing in an eligible rural or suburban area — which covers about 97% of the U.S. land area, more than the name suggests. Instead of PMI, you pay a 1% upfront guarantee fee and a 0.35% annual fee. On a $400,000 home with $0 down, that's about $2,604/month. The catches are real, though: your household income has to fall under a local limit, and the property has to be in an eligible area.
Who's eligible
- Household income under 115% of the area median — about $112,450 for a 1–4 person household in most areas for 2026 (up to $153,500 in higher-cost areas), and $148,450 for 5–8 persons (up to $202,600). This counts all household income, not just the borrowers'.
- Property location in a USDA-eligible rural or suburban area — check the map, since plenty of small towns and outer suburbs near major metros qualify, not just farmland.
- Credit score around 640+ for automated approval; manual underwriting is possible below that with strong compensating factors.
- Primary residence only, and U.S. citizenship or permanent residency.
The zero/low-down-payment landscape
Same $400,000 home, same 6.25% rate, across every low-down-payment program:
| Program | Down payment | Upfront fee | Ongoing MI/fee | Total monthly |
|---|---|---|---|---|
| USDA | $0 | 1.00% ($4,000) | 0.35% ($117/mo) | $2,604 |
| VA (first-time use) | $0 | 2.15% ($8,600) | None | $2,516 |
| FHA | 3.5% ($14,000) | 1.75% ($6,755) | 0.55% ($177/mo) | $2,595 |
| Conventional | 3% ($12,000) | None | ~0.82% PMI ($265/mo) | $2,654 |
USDA and VA are the only two programs here that need zero cash down. Between them, VA is cheaper monthly if you're eligible — but USDA doesn't require any military service, only income and location eligibility.
Base loan: $400,000 (0% down)
Upfront guarantee fee: $400,000 × 1.00% = $4,000 (financed)
Financed loan: $400,000 + $4,000 = $404,000
Monthly P&I on $404,000 @ 6.25%, 30yr = $2,487.50
Annual fee: $400,000 (base loan) × 0.35% = $1,400/year → $116.67/month
Total: $2,487.50 + $116.67 = $2,604.17/monthThings to consider
- The annual fee doesn't cancel on its own. Unlike conventional PMI, there's no LTV threshold where it automatically drops off — it runs for the life of the loan unless you refinance into a different program.
- Only one loan structure is offered: a 30-year fixed rate. There's no USDA ARM or 15-year Guaranteed loan option.
- DTI guidelines run roughly 29% front-end / 41% back-end, though automated underwriting (GUS) can approve higher ratios with strong compensating factors.
- "Rural" is broader than it sounds. Always check the actual eligibility map for the specific address — plenty of buyers assume they're disqualified and aren't.
- Sellers can cover closing costs — up to 6% of the purchase price as a concession, which matters more here since you're not bringing a down payment either.
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Frequently asked questions
Is a USDA loan only for farms?
No. It covers a surprising number of small towns and outer suburbs near major metro areas — around 97% of the U.S. land area technically qualifies. Always check the specific address on the eligibility map rather than assuming.
Does the USDA annual fee ever go away?
No. Unlike PMI, it isn't tied to your loan-to-value ratio and doesn't cancel automatically. It lasts for the life of the loan unless you refinance into a conventional, FHA, or VA loan.
What credit score do I need for a USDA loan?
Most lenders want around 640 or higher for automated approval. Manual underwriting is possible with a lower score if you have strong compensating factors.
Can I use a USDA loan for an investment property?
No. USDA loans require the home to be your primary residence, the same as FHA and VA loans.
Is there a maximum USDA loan amount?
There's no fixed loan limit the way FHA and conventional loans have. Instead, how much you can borrow is effectively capped by your household income limit and debt-to-income guidelines.
Related guides
What Is PMI (Private Mortgage Insurance)?
What PMI costs by down payment size, how it's calculated, and the two ways it legally comes off your loan.
Read moreFHA vs. Conventional Loan: Which Is Right for You?
Five ways to finance the same home compared — and why your credit score, not the headline rate, usually decides which loan wins.
Read moreVA Loans Explained: Eligibility, Benefits, and How They Work
Zero down, no mortgage insurance ever, and a one-time funding fee — what a VA loan actually costs across five scenarios.
Read moreHow Much House Can I Afford?
The 28/36 rule applied to a real budget — and why $500 of monthly debt costs $70,000 of buying power.
Read moreFigures on this page are generated from the same amortization engine that powers the MortMetrix dashboard, using the example loan stated in each table. They are estimates based on a fixed-rate loan at a constant rate and are not your actual loan terms. This is educational information, not financial advice.