USDA Purchase - AnnieMac

The USDA Purchase

What are USDA purchase loans?

USDA purchase loans are designed for buyers whose household income does not exceed 115 % of the area median and whose chosen property sits in a USDA eligible “rural” zone—often defined as a community of 50,000 residents or fewer, which includes many outer ring suburbs.

Benefits of a USDA Purchase Loan

Zero Down Payment

Qualified borrowers can finance 100 % of the purchase price plus the 1.00 % up front guarantee fee, effectively enabling 101 % loan to value.
Lower Monthly Cost Than PMI

Instead of private mortgage insurance, USDA charges an annual fee of 0.35 % of the outstanding principal—typically far cheaper than FHA or low down payment conventional options.
Competitive Fixed Rates

The federal guarantee lets lenders offer rates on par with or slightly below conventional loans.
Flexible Credit Standards

Automated underwriting approvals are common at 640+ credit scores, and manual reviews may allow lower scores with strong payment histories.
Generous Seller Concessions

Sellers (or other interested parties) may pay up to 6 % of the sales price toward the buyer’s closing costs and prepaid expenses.

Frequent Questions Regarding USDA Purchases

Do USDA loans really have no mortgage insurance?

They have no private mortgage insurance; instead, they charge the modest up front and annual guarantee fees noted above, which are generally cheaper than PMI.

Can I own another home and still use a USDA loan?

Possibly. You must demonstrate the other home is “inadequate,” too far from your new job, or no longer within reasonable commuting distance. Otherwise, simultaneous ownership is usually disallowed.

Are condos or manufactured homes eligible?

Yes—if the project or unit meets USDA guidelines and is in an eligible area. Manufactured homes must be new, permanently affixed, and meet HUD code.

How long does USDA underwriting take?

After lender approval, the file is submitted to the state USDA office for a final commitment. Turn times vary by state but commonly run 3–10 business days.

Can I refinance out of the annual fee later?

Absolutely. Once you’ve built at least 20 % equity—or moved to a non rural area—you can refinance into a conventional loan with no PMI, eliminating the USDA annual fee altogether.

Find Out More

Interested in a USDA purchase loan? Submit your information.

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USDA Purchase Loans

The USDA Purchase

Benefits of a USDA Purchase Loan

Frequent Questions Regarding USDA Purchases

Let's Talk USDA Purchase Loans