USDA Rural Development Loan
mortgageAlso known as: USDA loan, rural development loan, Section 502 loan
Updated · Written and reviewed by Konstantin Iakovlev
Detailed explanation
Two main programs: Direct (issued by USDA, very-low-income borrowers, subsidized rates) and Guaranteed (issued by approved lenders, USDA insures). 2026 income limits: typically 115% of area median, varies by county. Property eligibility map at eligibility.sc.egov.usda.gov — covers ~97% of US land area but excludes most metro suburbs. No first-time-buyer requirement. No reserves required. Closing costs can be financed if appraisal exceeds purchase price. Property must be the primary residence, modest in size and design (no luxury homes, no income-producing improvements). Many lenders unfamiliar with USDA — work with one that closes them regularly.
Use these calculators to apply this concept
Related mortgage terms
PITI (Principal, Interest, Taxes, Insurance)
PITI is the four components of a typical monthly mortgage payment: Principal (loan paydown), Interest (lender fee), Taxe...
Private Mortgage Insurance (PMI)
PMI is insurance protecting the lender if you default on a conventional mortgage with less than 20% down. PMI premiums a...
Debt-to-Income Ratio (DTI)
DTI is the percentage of your monthly gross income that goes to debt payments. Lenders use front-end DTI (housing only ≤...
Amortization
Amortization is the gradual paying down of loan principal over time through scheduled monthly payments. Each payment inc...
Home Equity Line of Credit (HELOC)
A HELOC is a revolving credit line secured by your home equity. Like a credit card, you borrow against an approved limit...
← Back to glossary · Suggest an addition: [email protected]