Skip to Content

Down Payment Requirements for USDA Loans

Key Learnings

  • USDA loans are government-backed mortgages with no down payment requirement, making them ideal for first-time homebuyers with limited savings.
  • While USDA loans do not require a down payment, borrowers have the option to make a down payment, which can lower their monthly mortgage payments and provide more equity in the home.
By Neighbors Bank Team May 23, 2023

USDA loans are government-backed mortgages that allow borrowers to purchase homes in eligible rural and suburban areas without putting any money down. These loans are a popular choice for first-time homebuyers who cannot afford a large down payment or have limited savings.

In this article, we will delve into USDA home loan down payment requirements and how they differ from other types of mortgages.

Do USDA Loans Require a Down Payment?

No down payment is typically required. The USDA $0 down program aims to help low to moderate-income families achieve homeownership. It is important to note that borrowers must still pay closing costs and other fees with the loan.

Down Payment Requirements

The borrower must meet USDA eligibility requirements to take advantage of no down payment. These include:

  • Being a U.S. citizen, U.S. permanent resident or a foreign national who can’t qualify for a conventional mortgage

  • The potential home is in a qualifying USDA area

  • Meeting the USDA loan income limits

  • Living in the home as your primary residence

Can I Still Make a Down Payment on a USDA Loan?

Yes, you are allowed to put money down on a USDA loan even though it isn’t required. Doing so may decrease your monthly mortgage payments. If you can afford to and have enough money saved, putting a small amount towards a down payment may be worth it.

Pros and Cons of Making a Down Payment

Pros Cons
Start with more equity in home Less cash for expenses
May expedite loan process More susceptible to unstable property values
Smaller monthly payments Larger monthly payments

USDA Loan Down Payment vs Other Types

While a down payment can help lower monthly mortgage payments and reduce the amount of interest paid over the life of the loan, it can also be a significant obstacle for those who cannot afford to save up thousands of dollars for a down payment. USDA loans can be a viable option for those with limited savings, but let’s see how it compares to other home loan types.

Loan Type Down Payment Required Down Payment %
USDA No 0%
VA No 0%
FHA Yes 3.5%
Conventional Yes At least 3-5%
Written by:
Neighbors Bank Team
Neighbors Bank Team headshot

Neighbors Bank Learning Center

Essential reads to get you home with confidence

Visit Learning Center