USDA home loans are mortgages backed by the U.S. Department of Agriculture's Rural Development program. They are designed to help qualified borrowers purchase homes in USDA-eligible areas and may offer 100% financing for eligible borrowers and properties. Income limits and other program requirements apply.
USDA loan eligibility depends on both the borrower and the property. Borrowers must meet applicable income, credit and other program requirements, and the home must be located in a USDA-eligible area. USDA loans are generally intended for eligible primary residences rather than investment properties or vacation homes.
Some common misconceptions of USDA Loans:
“USDA loans are only for farmers.”
USDA home loans are designed for eligible homebuyers and are not limited to farmers or agricultural properties.
“The property has to be far out in the country.”
Not necessarily. USDA determines property eligibility by address, and some eligible communities may be closer to metropolitan areas than buyers expect.
“USDA loans are only for first-time homebuyers.”
USDA loans are not limited to first-time buyers. Eligible repeat homebuyers may qualify as well.
“Everyone qualifies for 100% financing.”
USDA loans may provide 100% financing, but borrowers and properties must meet applicable USDA eligibility and loan requirements.
“USDA loans have no income restrictions.”
USDA household income limits apply and can vary based on location and household circumstances.
Available to First-Time and Repeat Homebuyers
100% Financing May Be Available
No Traditional Down Payment May Be Required
No Prepayment Penalties
Eligible Existing Homes and Certain New Construction
USDA loans can provide an affordable path to homeownership for qualified buyers purchasing homes in eligible areas of Maryland. Although the program is commonly associated with rural communities, USDA-eligible areas may include communities that buyers do not necessarily think of as rural.
Property eligibility is determined by USDA and can vary by location. In addition to the property being located in an eligible area, borrowers must meet applicable household income and other program requirements, and the home must generally be used as a primary residence.
For qualified Maryland homebuyers, USDA financing may offer up to 100% financing, which can reduce the amount of cash needed for a down payment. Eligibility should be reviewed for both the borrower and the specific property before making a financing decision.