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USDA Loans

About USDA Home Loans

The United States Department of Agriculture (USDA), established the USDA Home Loan Program in 1991 to provide affordable housing opportunities.  Incredibly, this wonderful home loan program is available to Americans living in roughly 97% of the geographic United States landmass.

Also referred to as the USDA 502 Guaranteed Rural Housing Loan Program, the USDA Home Loan Program offers individuals and families a zero-down payment home loan with great interest rates and terms, making the dream of homeownership accessible and affordable for tens of thousands of Americans annually. 




The United States government has a vested interest in the affordability and stability of housing opportunities. The USDA Home Loan Program is one of the most significant efforts by the government to accomplish this objective. By offering this unique ZERO down payment home loan, a large percentage of Americans have access to homeownership without the requirement of tens of thousands upfront.


Surprisingly, USDA Home Loan interest rates are among the lowest across all mortgage types – often even lower than 20% down conventional loans. In large part, this is because the government guarantees 90% of the value of the USDA mortgage for the lender, reducing significant lender risk. Because the risk is so low under the USDA Home Loan Program, lenders can offer competitive fixed interest rates to consumers.

The Qualification Process Is

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Every mortgage, regardless of type, will have closing costs.  The difference in loan programs is the available options for addressing closing costs and how much they can be.  The USDA Home Loan Program’s objective is to provide affordable housing opportunities, and addressing closing cost expense is no different.  As part of the USDA Home Loan Program, the government has set closing cost thresholds and provides several ways for homeowners to address them.  In fact, it is common for USDA homebuyers to have no out of pocket expenses at all.  Here are a few ways, in any combination, the USDA Home Loan Program allows homebuyers to address closing costs:

  • When home appraisal value supports, closing costs may be financed
  • Sellers may contribute toward closing costs (common home negotiation practice)
  • Homebuyers may receive a gift toward closing costs
  • Homebuyers may simply pay closing costs out of pocket
  • Any combination of the above


The USDA Home Loan Program was created to make homeownership accessible, not unobtainable. Like all mortgage programs, there are credit qualifications, but the USDA Home Loan Program qualification criteria is less rigorous than conventional mortgages. Of course every credit history is different, but in short you don’t need perfect credit to qualify for the USDA Home Loan Program and become a homeowner.


Unless you can afford a 20% down payment conventional mortgage, or you are a military veteran with a Veterans Affairs (VA) mortgage, monthly mortgage insurance will be a reality of your home loan. This is true of both USDA and FHA Home Loans. Many homebuyers, to their detriment, fail to consider monthly mortgage insurance as a factor in choosing a home loan.

USDA’s monthly mortgage insurance rate is 0.35% annually, while FHA’s monthly mortgage insurance rate, on a 3.5% down home loan, is 0.85%. While this 0.5% difference may not seem like a lot in terms of percentage, there is a massive difference in dollars and cents. On a $200,000 home purchase/30 year term, USDA’s mortgage insurance is over $75 cheaper per month than FHA. Consider how much savings USDA offers in terms of monthly mortgage insurance over the course of 30 years!

Leaders Credit Union is an
Equal Housing Lender

Forward Lending Solutions
c/o Leaders Credit Union
P.O. Box 10008
Jackson, TN 38308

(844) 824-1735

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