USDA Guaranteed Home Loans, No Down Payment in Eligible Rural Areas

The USDA Single Family Housing Guaranteed Loan Program lets approved lenders offer 100 percent financing, meaning no down payment, to eligible low- and moderate-income buyers in eligible rural areas. The loan comes from a private lender. USDA Rural Development backs it with a 90 percent loan note guarantee, which reduces the lender's risk. As of October 2026, USDA's program page lists the application window as open.

1. What the program is

USDA calls this the Section 502 Guaranteed Loan Program (SFH-G). The USDA page says it helps approved lenders give low- and moderate-income households the chance to own a modest, safe primary residence in an eligible rural area. With the guarantee, eligible applicants can purchase, build, rehabilitate, improve, or relocate a home.

Two details from the fact sheet are easy to miss. First, the program is not restricted to first-time homebuyers. Second, you do not apply to USDA directly: you must work with an approved USDA lender, and USDA's page says to contact one to review the requirements before applying.

2. Who can apply

According to USDA, you must:

• Meet income eligibility. The program page says household income cannot exceed 115 percent of median household income, and the fact sheet says the median is measured for the area where the eligible home is located.
• Agree to personally live in the home as your primary residence.
• Be a U.S. citizen, U.S. non-citizen national, or qualified alien.
• Have stable, dependable income and show a willingness and ability to repay debt.
• Be unable to get conventional financing with no private mortgage insurance (PMI), per the fact sheet.
• Not be suspended or debarred from participating in federal programs.

3. Which properties qualify

Single-family homes must be in an eligible rural area. USDA provides an eligibility site where you can enter a specific address or search the map to see eligible areas.

Other property points from the fact sheet:

• Loans are based on repayment ability. There is no set maximum purchase price or acreage limit, as long as the acreage is common for the area.
• Flipped properties are allowed if you are otherwise eligible.

4. The money terms

The fact sheet lists these loan terms:

The last row has a practical effect. Because the loan is based on appraised value, USDA says you can potentially include closing costs, home repair expenses, and items such as utility connection fees, tax and insurance escrow, essential household equipment, and site preparation in your financing.

5. Timing and the application window

USDA's page says approved lenders can submit applications for processing on an ongoing basis during the program year, which runs from October 1 to September 30. In practice that means there is no single deadline to race toward within the year. The starting point is still a conversation with an approved lender, who reviews the requirements with you before anything is filed.

6. How to start

1. Check whether the specific address is in an eligible rural area using USDA's property eligibility map.
2. Check your area's income limit against your household income. USDA's fact sheet links to the income information.
3. Contact an approved USDA lender. USDA lists approved lenders by state on its lender resources page.
4. Ask the lender for a Loan Estimate and compare it with other loan types.

Rules can change. USDA's own note on the fact sheet says to consult official program instructions or your local Rural Development office, because information changes. The program is governed by 7 CFR Part 3555 and the SFH-G Handbook.

7. Key takeaways

• The USDA guaranteed loan offers 100 percent financing with a 90 percent guarantee to the lender.
• Household income cannot exceed 115 percent of the area median, and the home must be your primary residence in an eligible rural area.
• It is not limited to first-time buyers, and you apply through an approved lender, not USDA directly.
• The rate is fixed for 30 years and is negotiated with the lender.
• Eligible costs such as closing costs and repairs may be financed because the loan is based on appraised value.

Eligibility and limits are set by USDA and can change. This is general information, not financial advice.