Loan Program

USDA Home Loans: Financing for Eligible Rural and Suburban Areas

USDA loans provide a government-backed mortgage option for homebuyers purchasing in eligible rural and suburban areas. The program is administered by the U.S. Department of Agriculture through its Rural Development division, which sets the guidelines for eligibility, property requirements, and underwriting. Like other government-backed programs, the USDA does not lend money directly; it provides a guarantee to approved lenders.

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Quick Answer

A USDA loan is a mortgage backed by the U.S. Department of Agriculture and offered through approved lenders. The program is designed for homebuyers purchasing in eligible rural and suburban areas. It is one of several government-backed mortgage options available to qualifying borrowers.

Eligibility

USDA loans are for eligible rural and suburban areas

USDA loans are designed for homebuyers purchasing in eligible rural and suburban areas. The USDA maintains maps of eligible areas, and your loan officer can help you determine whether a property you're considering qualifies.

How USDA Loans Work

A USDA loan is a mortgage backed by the U.S. Department of Agriculture’s Rural Development program and offered through USDA-approved lenders. The USDA provides a guarantee to the lender, which reduces risk and shapes the program’s guidelines. The program is designed specifically for homes in eligible rural and suburban areas, as defined by the USDA.

Eligibility for a USDA loan depends on both the borrower and the property. The borrower must meet income guidelines, which are based on the area and household size. The property must be located in an eligible area as determined by the USDA’s eligibility maps. The program is intended for primary residence purchases, meaning the borrower must plan to live in the home.

USDA loans include a guarantee fee, which is similar in concept to the VA funding fee or the FHA upfront premium. The fee helps fund the program and can often be financed into the loan. Borrowers also pay an ongoing annual fee that is included in the monthly payment. Understanding the full cost structure is important when comparing USDA to other government-backed options.

Key Considerations

What to know about USDA loans

Property must be located in a USDA-eligible rural or suburban area

Income eligibility is based on area median income and household size

Limited to primary residences — not available for second homes or investment properties

Includes both an upfront guarantee fee and an ongoing annual fee

Local

Coastline serves eligible USDA areas

From Maryland's suburban communities to rural Delaware and Pennsylvania, Coastline helps homebuyers explore USDA financing in the areas we serve.

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Frequently Asked Questions

What is a USDA loan?

A USDA loan is a mortgage backed by the U.S. Department of Agriculture’s Rural Development program and offered through USDA-approved lenders. The program is designed for homebuyers purchasing in eligible rural and suburban areas.

What areas qualify for a USDA loan?

USDA eligibility is based on geographic areas defined by the USDA. Many rural and some suburban areas qualify, but eligibility can change. Your loan officer can help you check whether a specific property address is in an eligible area.

Can I use a USDA loan for a second home?

No, USDA loans are limited to primary residences. If you are interested in financing a second home, your loan officer can discuss other program options that may be available.

How does a USDA loan differ from an FHA loan?

USDA loans are backed by the U.S. Department of Agriculture and are restricted to eligible rural and suburban areas, while FHA loans are backed by the Federal Housing Administration and are not geographically restricted. The two programs also differ in income guidelines, fee structures, and property requirements.

What is USDA eligibility?

USDA eligibility involves both the property and the borrower. The property must be in a USDA-eligible area, and the borrower’s household income must meet program guidelines. The home must also be used as a primary residence.

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