USDA Rural Development (RD)
No down payment required!
What is a Rural Development loan?
USDA (RD) mortgages are government backed loans. The loan is funded or originated by the lender but has a guarantee from the US Department of Agriculture Rural Development (USDA RD). Because of this guarantee, there is less risk to the lender, therefore allowing relaxed credit and bankruptcy guidelines and low to no down payment options. RD loans are only available in certain rural, less-populous areas.
USDA Rural Development offers 100% financing for qualified borrowers to purchase or build a single-family home or refinance their existing RD loan in designated rural areas. That means no money down!
You don’t have to be a first-time home buyer, but you do need to meet certain income guidelines (you cannot exceed 115% of your local median household income) and the property must be your primary residence in an area designated as rural by the USDA.
FAQs
There are different definitions as to what defines a ‘rural’ area vs an urban or metro area. Population, geographic isolation, and the local labor market are all factors considered and this can lead to confusion about a property’s program eligibility. The best way to know if your property is in an USDA designated area is check out the program’s eligibility site at https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp
Single family homes
PUDs
New Construction (less than one year old with Certificate of Occupancy)
Existing manufactured homes eligible for the Manufactured Home Pilot Program
Both are government loans, meaning the lender originates the loan and either the USDA or FHA guarantees it. And both are great options for low-to-moderate income borrowers, first time homebuyers, buyers with little saved for a down payment and those with less than great credit.
The key differences are:
- USDA RD loan requires the home to be in a rural area
- FHA loans require a minimum of 3.5% down payment while RD loans don’t require a down payment
- They are backed by different government agencies (which means they have different requirements)
- FHA loans have maximum loan limits
- USDA has rules regarding income levels, and FHA does not
- FHA loans require a mortgage insurance premium (MIP) for the life of the loan if you put less than 10% down
- RD loans charge a funding fee that is less costly than FHA’s MIP
See our FHA loan description for more details about FHA loans
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- Once your application is submitted, you can log back into the MiMutual Mortgage Online Loan Application to securely upload requested documents, view your loan status, and communicate with your mortgage team.
- If you have questions, reach out to your MiMutual Mortgage Loan Officer.
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