Casa Academy

Reviewed by Casa Academy and updated July 29, 2026 using the current DBPR checklist and Pearson VUE scheduling guidance.

USDA Loan

A USDA loan is a zero-down-payment mortgage guaranteed by the U.S. Department of Agriculture Rural Development for eligible borrowers purchasing modest homes in designated rural and suburban areas, with income limits and property eligibility requirements.

Exam context

USDA Rural Development: zero down, income and location limits, primary residence. Guarantee fee replaces PMI on guaranteed loans. Not available in densely urban areas.

Program requirements

Borrowers must meet household income limits (typically 115% of area median income), occupy the property as a primary residence, and choose a home that meets USDA property standards. The property must sit in an eligible rural area per USDA maps, which include many exurban locations near metros. USDA offers guaranteed loans through approved lenders and direct loans for very-low-income applicants.

Costs and agent guidance

USDA guaranteed loans charge an upfront guarantee fee and annual fee instead of private mortgage insurance. Sellers may contribute toward closing costs within limits. Agents marketing rural listings should verify eligibility early because ineligible locations or income exceedances disqualify otherwise qualified buyers.

Examples

  • Eligible purchase

    A first-time buyer with moderate income purchases a single-family home in a USDA-eligible county with no down payment, financing 100% of the appraised value subject to guarantee fees.

  • Ineligible location

    A buyer targets a home inside a major city core outside USDA boundaries. The loan officer redirects to FHA or conventional options because the property fails geographic eligibility.

Keep studying

Practice usda loan questionsEnroll in pre-licensing

Related terms

  • FHA loansGovernment-insured loan with different eligibility rules.
  • VA loanVeterans Affairs zero-down program for eligible service members.

Related resources

Sources