Loan Products · February 2, 2025
USDA Loans: The Zero-Down Mortgage Most Buyers Do Not Know About
USDA loans offer zero down, low rates, and lower mortgage insurance than FHA — and they are available in far more areas than most people realize.
USDA loans are one of the mortgage industry's best-kept secrets. Most buyers dismiss them assuming they are for remote farmland. The reality: millions of homes in suburban communities qualify, and the terms frequently beat every other low-down-payment option.
What a USDA Loan Offers
$0 down payment (100% financing), fixed interest rates competitive with FHA, lower annual mortgage insurance (0.35% vs. FHA's 0.55%+), and up to 6% seller concessions for closing costs.
What Rural Really Means
The USDA's definition of eligible areas is surprisingly inclusive. Communities with populations up to 35,000+ may qualify, determined at the property address level. Many suburban neighborhoods qualify.
In Illinois: most of downstate plus outer suburban Chicago areas. In Indiana: large portions including many suburban areas. In Florida: areas outside major urban metro cores.
Income Limits
All household income counts toward the limit. In many areas a family of 4 can earn $110,000-$130,000+ and still qualify.
USDA vs. FHA on $280,000 Purchase
USDA: $0 down, 1% upfront fee ($2,800), 0.35% annual MI ($81.67/month). FHA: $9,800 down, 1.75% upfront ($4,900), 0.55% annual MI ($137.50/month).
USDA wins on down payment AND ongoing cost. Call 309-222-8286.