For many Americans, saving for a down payment can be challenging—especially when home prices are rising. But there are a few loan options available that require little or no down payment at all.

One of them is a USDA loan, a home financing tool backed by the government that aims at helping folks in rural areas become homeowners. USDA loans might not be as popular as other mortgage options, but they’re a savvy choice for many—particularly those whose homeownership dreams involve escaping the hustle and bustle of the big city.

Benefits of USDA Loans

One of the major benefits of a USDA loan is that no down payment is required. That’s right—you can finance the entire purchase price of your home under the program. With USDA loans, the seller of the home you want to buy can also pay up to 6% of your closing costs, which can make homeownership even more affordable.

There are other benefits as well. Unlike other types of loan programs, your credit doesn’t have to be perfect to qualify for a USDA loan. Plus, rates for USDA loans are competitive, often matching or even beating conventional loan rates, which makes a homebuyer’s monthly payments even more manageable.

A Few Caveats

As their name implies, USDA loans were created by the U.S. Department of Agriculture to boost homeownership in less-populated communities by making it easier for low- to moderate-income earners in these areas to buy homes. The roots of the USDA loan go way back to the Bankhead-Jones Farm Tenant Act of 1937, which was part of a series of federal initiatives under The New Deal, and it’s been helping rural homebuyers ever since.

The one downside is that USDA loans aren’t available everywhere. In fact, they’re only available in rural areas and small towns with fewer than 35,000 residents. However, the number of areas that qualify for USDA loans represents roughly 97% of the entire country—plus many communities that qualify are located near higher population areas. The USDA publishes an online map that shows which areas qualify, and you can find it right here.

In addition to being limited to certain areas, the USDA loan program has limits on the amount of money you can borrow to buy a home. These caps are based on the median household income in the area where the home you want to buy is located, and they are adjusted depending on the size of your family.

Getting Started

USDA loans are a great option for millions of Americans. Right By You Mortgage has many years of experience helping borrowers navigate the USDA loan process with confidence, and a long track record of helping families in rural areas make their homeownership dream a reality.

If a USDA loan sounds right for you, our loan experts at Right By You Mortgage would be happy to help you get you started. Find a local loan officer near you or email us at