USDA Rural Development Loan Calculator

About Rural Development Loans

A Rural Development Loan is a home loan that requires no down payment and is guaranteed by the USDA. This low-cost mortgage option offers flexible financing terms with some of the lowest mortgage payments available. For more information about this loan program visit: Rural Development Loans.

How the USDA Guarantee Fee Works

USDA loans replace the down payment with two fees instead: an upfront guarantee fee and a small annual fee billed monthly. The upfront fee is financed by dividing your loan balance by 0.99, which has the same effect as adding roughly 1% to your loan amount, and it's rolled into the loan rather than paid in cash at closing. The annual fee, currently 0.35% of the remaining balance, is spread across twelve monthly payments and functions similarly to mortgage insurance, though it's meaningfully cheaper than FHA's monthly MIP. Because there's no down payment in the calculation at all, the total loan amount above equals your purchase price plus the financed guarantee fee, which is worth keeping in mind when you're comparing a USDA quote against an FHA or conventional one side by side.

Common Questions About USDA Loan Eligibility

Does my property have to be in a rural area?

It needs to fall within a USDA-designated eligible area, which is broader than "rural" sounds. Many suburbs and small towns outside major metro centers qualify. Check the address against the USDA eligibility map or ask a loan officer before you fall in love with a specific listing.

Is there an income limit for USDA loans?

Yes. USDA Rural Development loans are designed for moderate-income households, and the limit varies by county and household size. A loan officer can pull the current limit for your target area and compare it against your income.

How much house can I afford with zero down?

Since there's no down payment to save toward, affordability is mostly about your monthly payment fitting your budget and debt-to-income ratio. Run a few purchase prices through the calculator above and compare the total payment, including the guarantee fee, against what you're comfortable paying each month.

Is USDA cheaper than FHA?

Often, yes, for eligible borrowers. The 0.35% annual USDA fee is lower than FHA's typical annual MIP rate, and USDA requires no down payment versus FHA's minimum 3.5%. The tradeoff is USDA's location and income restrictions, which FHA doesn't have.

USDA Loan Calculator FAQ

What is the current USDA guarantee fee?

For loans committed on or after October 1, 2016, the upfront guarantee fee is 1% of the loan amount, financed by dividing your loan balance by 0.99, and the annual fee is 0.35% of the remaining balance billed monthly.

Do USDA loans require a down payment?

No. USDA Rural Development loans can finance up to 100% of the purchase price for eligible borrowers in eligible areas.

Can I use a USDA loan for a home in a small city?

Possibly. USDA eligibility is based on population and area designation rather than the word "rural" alone, and a surprising number of small cities and outlying suburbs qualify. Check the specific address on the USDA eligibility map.

Does the USDA annual fee ever go away?

It stays for the life of the loan on most USDA mortgages, similar to FHA monthly MIP. Refinancing into a conventional loan once you have sufficient equity is the typical way to eliminate it.

Are there income limits to qualify for a USDA loan?

Yes, USDA loans are intended for moderate-income households and the exact limit depends on your county and household size. A loan officer can check the current limit against your income.

Still have questions? See all frequently asked mortgage questions or call a mortgage expert at 1-800-555-2098.

NOTE: USDA Guarantee Premiums used in this calculator are accurate for USDA funding commitments on or after October 1st, 2016.

Riverbank Finance LLC is not part of the USDA government entity. The information provided by this USDA Rural Development mortgage calculator is for illustrative purposes only. The default values are hypothetical and may not be applicable to your individual situation. Speak with a licensed loan officer to review rate and terms that may be available for you. The calculated results are intended for illustrative purposes only and accuracy is not guaranteed.