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USDA loans help first-time home buyers — and we’re not just talking about farmers and ranchers. The agency’s Rural Development Program covers a lot of ground, from rural acres that are fit to farm to suburban lots perfect for porches.
While no-down-payment loans are the main draw, low interest rates and even grants for qualified home buyers sweeten the deal.
Our USDA mortgage calculator can help you run the numbers to see if the home you’ve got your eye on fits your monthly budget.
If you’re considering buying a home in a rural or suburban area, you may be eligible for a United States Department of Agriculture (USDA) home loan. USDA loans offer big benefits like zero down payment and low interest rates. But how do you know if you qualify for one and how much home loan you can get approved for? Using an online USDA loan calculator is the easiest way to find out
In this article, we’ll explain what USDA loans are, their key benefits, eligibility requirements, and how to use a USDA mortgage calculator to estimate your potential loan amount. Read on to learn more!
What is a USDA Home Loan?
USDA home loans are government-backed mortgages aimed at helping low-to-moderate income buyers in rural and suburban locales achieve homeownership.
The US Department of Agriculture guarantees these loans, meaning they insure lenders against losses if a borrower defaults. This encourages lenders to offer USDA loans with:
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No down payment required – Borrowers can get a USDA mortgage with zero money down, unlike conventional loans that typically need 3-20% down.
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Low interest rates – USDA loans often have interest rates comparable to conventional loans for buyers with good credit. Rates are generally lower than FHA loans.
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Flexible credit requirements – Minimum credit scores around 640 are usually needed But some lenders work with scores in the 580s,
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Low mortgage insurance – An upfront 1% USDA guarantee fee and annual 0.35% premium are required. But this is less than FHA or conventional loans with PMI.
In short, USDA mortgages expand homebuying opportunities for buyers who may not qualify for other low down payment programs like FHA due to credit or geographic restrictions.
USDA Loan Eligibility Requirements
While USDA loans offer nice perks, you must meet certain criteria to qualify:
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Location – The home must be in an eligible rural or suburban area. Over 97% of U.S. land is potentially eligible.
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Income limits – Your income must be below 115% of the median income for your area based on household size. Look up limits here.
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Credit score – Most lenders want scores of 640 or higher. Some may approve 580+ scores with strong compensating factors.
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Debt-to-income ratio – Your total debt payments should equal less than 41% of your gross monthly income.
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Work history – Expect to provide 1-2 years of employment history. Self-employed borrowers often need 2 years.
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Home type – You must make the home your primary residence, not a vacation or investment property.
In addition, the home must meet USDA standards regarding condition, access to utilities, etc. Meet with a USDA lender to go over full eligibility. Many buyers qualify and don’t even realize it.
How To Use a USDA Loan Calculator
Once you’ve determined you likely meet eligibility standards, a USDA mortgage calculator can give you an idea of your potential loan amount and payments.
Here are steps to follow when using an online USDA loan payment calculator:
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Enter the home’s purchase price – This is what you’ll offer the seller. Or enter your budget if house hunting.
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Input down payment amount – USDA requires none. But you can enter any amount you plan to put down.
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Enter estimated interest rate – Rates for well-qualified buyers today run around 5 – 6%. Check current rates.
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Select loan term – 30 years is most common. USDA also offers 15 year fixed mortgages.
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Input location – This estimates property taxes and insurance.
With this information, the USDA mortgage calculator will estimate:
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Principal and interest – The amount going toward paying down principal and interest charges each month.
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Total monthly payment – Includes principal, interest, taxes, insurance, and USDA annual fee.
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Total interest and costs – How much you’ll pay in interest and other costs over the full loan term.
The calculator results help you determine if your target home fits within your budget. If not, you may need to adjust the purchase price or down payment.
Playing with the numbers also lets you see how a larger down payment or shorter 15-year term affects affordability.
Sample USDA Mortgage Calculator Results
Let’s look at an example to see how this works.
Say you’re buying a home for $200,000 with a 30-year USDA loan at 5.5% interest. You’ll put 3% or $6,000 down.
Here are estimated USDA mortgage calculator results:
- Monthly principal & interest payment = $931
- Estimated total monthly payment = $1,450
(Includes taxes, insurance, USDA fee) - Total interest and costs over 30 years = $167,612
These numbers suggest a $200,000 home fits your budget comfortably.
But if buying a more expensive $250,000 house, the payment calculations indicate you may want to save a larger down payment first.
Next Steps After Using USDA Calculator
Once you have estimates from a USDA loan calculator in hand, take these next steps:
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Verify eligibility – Have a lender confirm you meet location, income, and credit requirements.
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Get pre-approved – Ask for a pre-approval letter stating your estimated loan amount and terms. This strengthens purchase offers.
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Find the best lender – Shop lenders to compare loan estimates and interest rates. Apply with the lender offering the best deal.
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Make an offer – Make an offer on your dream home within your approved loan amount!
FAQs About USDA Loans and Loan Calculators
Here are answers to some common questions people have about USDA mortgages and using USDA loan calculators:
Are there USDA loan limits?
No, USDA doesn’t impose maximum loan limits. Your lender will determine loan amounts you qualify for based on your income, debts, and credit profile.
What credit score is needed?
In most cases, you’ll need at least a 640 FICO score for a USDA loan. But some lenders may approve 580+ scores with strong compensating factors like a low debt-to-income ratio.
Can I use a USDA loan for an investment property?
No. USDA loans require you to occupy the home as your primary residence within 60 days of closing. They cannot be used for investment properties or vacation homes.
Do I have to be a farmer to get a USDA loan?
Absolutely not. USDA loans are for regular residential properties in suburban and rural locales. You don’t need to be in agriculture to qualify.
How do I find a lender who offers USDA loans?
Most national lenders like loanDepot, Fairway, and Guild Mortgage offer USDA loans. Local banks and credit unions may as well. Get a few quotes to find the best USDA lender for your needs.
The Bottom Line
USDA home loans allow rural and suburban buyers to purchase nice homes with zero down payment and competitive rates. Determining your potential USDA mortgage amount ahead of time using an online USDA loan calculator helps set expectations.
Follow the steps to input your specific financial details. Then work with a lender to verify eligibility and get pre-approved. Soon you’ll be using your USDA financing to buy your dream home!
How to use the USDA mortgage calculator
First off, a big pat on the back for all the research you’re doing. Using our USDA mortgage calculator helps you confidently decide just how much house you can afford.
Step-by-step, here’s how the NerdWallet USDA home loan calculator works:
- Input the purchase price of the home you’re considering or your best guess of how much house you can afford.
- USDA loans usually don’t require a down payment, but you can enter a figure here if you are considering putting some money down. Zero works too.
- Next, enter the interest rate you expect to qualify for. Our mortgage rate tool can help you pin that number down.
- Finally, select how long your repayment term will be — 15 or 30 years.
The results will show your total monthly cost and the total cost of the loan over the term you selected.
You can also choose to break down the monthly or total costs in detail. Now that you have a good idea of what your loan will cost, you’ll be ready to shop for the best USDA lender for your particular situation.
There are a few other considerations:
- What loan term should I choose? A lot of people default to a 30-year USDA loan for no other reason than their monthly payment will be lower. However, if this is a starter home or you expect to move in five years or so, a 15-year term might be something to consider. It’s likely you’ll build equity in your home faster with a shorter term — and with a USDA loan’s lower interest rate, you might find the monthly payment fits your budget after all.
- What about an adjustable rate mortgage? If you are looking for an ARM, a USDA mortgage might not be for you. There are no adjustable-rate mortgages on the USDA menu. You can only choose from two flavors, both fixed: 15- and 30-year loans.
- Does this home fit my budget? The last thing you want is a monthly payment surprise. Our USDA home mortgage calculator includes some of the “hidden costs” in a mortgage, including taxes and insurance — as well as the USDA guarantee fee. Remember though, these costs are estimated. You’ll probably want to leave a little cushion in your budget.
- Should I make a down payment? You’re frowning right now, aren’t you? Make a down payment? It’s a USDA loan; I didn’t think I needed a down payment. This is a calculator; play with a few scenarios, perhaps including one where you put a small amount down. It will reduce the total interest you pay over the long haul and lower your monthly payment, as well.
USDA mortgage monthly payment 101
Many mortgage calculators consider only principal and interest. Here is what’s behind the curtain with the NerdWallet USDA mortgage payment calculator:
- Principal: This is your loan amount. If you make a down payment, that’s subtracted from your principal.
- Interest: The cost of borrowing the money, shown as a percentage rate. If you look at the breakdown of total costs, you’ll see the amount of interest paid over the life of the loan.
- The USDA guarantee fee: Often referred to as “mortgage insurance,” this is an upfront fee — and monthly premium — collected by the USDA. It helps the government defray the costs of borrowers who default on their loans.
- Property taxes: Often assessed annually, this is an estimated amount of tax. It’s usually built into your payment and drawn from an escrow account. This calculator assumes that tax will be 1% of the property value each year, but the actual amount you’ll pay could be higher or lower depending on where you live.
- Homeowner’s insurance: Borrowers require you insure your home, and this is an estimate of that cost. We’re assuming 0.3% of the home’s value each year, but the amount could be different based on your specific situation.