USDA loans can be excellent when you and the property both fit, and the fit is narrow. The pros: - True 100% financing. No down payment is required, and USDA does not require cash reserves to qualify (reserves just help as a compensating factor). - Cheaper insurance than FHA. USDA charges a one-time upfront guarantee fee plus a small annual fee collected monthly, both lower than FHA's equivalents. The annual fee does run for the life of the loan rather than dropping off at an equity threshold. Rates tend to sit in FHA's neighborhood, so the lower fees usually make for an attractive payment. - Appraisal room can cover closing costs. If the appraisal comes in above your purchase price, the difference can be used to finance eligible closing costs into the loan, up to the appraised value. It covers legitimate closing costs only, so it is a way to roll costs in rather than extra cash out. The two catches: - The property has to sit in a USDA-designated rural area, based on population thresholds. That sounds restrictive, but a large share of the country's land area qualifies, so check the USDA eligibility map for the exact address rather than assuming. - Your household income has to fall under USDA's limit for that area, which is tied to the local median. Unlike FHA and conforming loans, USDA has no published maximum loan amount or county loan limit. The practical ceiling is what your income supports at up to 100% of appraised value, with the income limit indirectly capping how much you can qualify for. Because both the geographic and income tests have to line up, check eligibility early rather than falling for a home first, and confirm the current boundaries and limits, since USDA updates them. If both boxes check, we are happy to run your address and income against the program in a free Roadmap conversation and show how the payment compares to FHA or conventional.