USDA loans are mortgages backed by the U.S. Department of Agriculture to encourage homeownership in eligible rural and suburban areas. They offer 100% financing, meaning no down payment is required for qualified borrowers.

These loans have competitive interest rates, flexible credit guidelines, and reduced monthly mortgage insurance compared to other low-down-payment programs. Borrowers must meet USDA income limits for their household size, and the property must be located in a USDA-designated eligible area.

USDA loans are for primary residences only and cannot be used for investment or vacation homes. They also allow sellers to contribute toward closing costs, which can help reduce the amount of money needed at closing.