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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.
Buying a home is likely one of the biggest financial decisions you’ll make in your life. Determining how much house you can afford is an important part of the homebuying process. USDA loans allow eligible borrowers in rural areas to purchase a home with no down payment But how do you know how much home you can afford with a USDA mortgage? Here’s what you need to know about using a USDA loan calculator to determine your budget
What is a USDA Loan?
USDA loans, also known as Section 502 loans, are mortgages guaranteed by the U.S. Department of Agriculture (USDA). They help provide affordable financing to low- and moderate-income borrowers in rural areas.
Some key features of USDA loans include:
- 100% financing – No down payment is required
- Low interest rates – Usually lower than conventional loans
- Flexible credit requirements – Minimum credit scores around 640
- Available nationwide – In eligible rural and suburban areas
USDA loans can only be used to purchase primary residences, not investment properties or vacation homes. Borrowers must meet income limits based on the area median income.
Instead of a down payment, USDA loans charge an upfront guarantee fee of 1% of the loan amount and an annual fee of 0.35% of the loan balance. These help reduce risk for the lender.
USDA Loan Calculator
An online USDA loan calculator allows you to estimate your monthly mortgage payment. It also shows how much house you may qualify for with a USDA loan based on your income, debts, and location.
Here are some key inputs for a USDA loan calculator
- Home price
- Down payment amount – USDA loans are 100% financing so this can be $0
- Interest rate – Rates are published daily for your area
- Loan term – USDA loans come in 30 year terms
- Upfront and annual fees – Currently 1% and 0.35%
- Property taxes, insurance
- Your income, debts, and credit score
The calculator runs the numbers and provides an estimated total monthly payment. It also shows the maximum home price you can likely afford based on lender guidelines.
Be sure to adjust the inputs, especially the home price and down payment, to see the impact on your budget and monthly payments.
How Much House Can I Afford?
When using a USDA loan calculator, there are a few key factors that determine how much home you can afford:
Loan limits – The USDA sets maximum loan limits based on the cost of housing in your county. For a 1-4 person household, the limit ranges from $200,000 in low cost areas up to $625,000 in high cost areas. Look up your county’s limit.
Front-end DTI – This debt-to-income ratio looks at your total monthly housing costs (mortgage, taxes, insurance) divided by gross monthly income. It should be below 29% for USDA loans. A lower ratio allows you to qualify for a higher mortgage amount.
Back-end DTI – This includes all your monthly debts divided by income. It should be below 41% for USDA loans. The lower your total debts, the more you may be approved for.
Credit score – USDA lenders prefer scores of 640 or higher. But they may approve borrowers with scores as low as 620 with good compensating factors. A higher score helps you qualify for a bigger loan.
Interest rate – The lower the rate, the more house you can afford at any given price due to lower monthly payments. Compare rates from multiple lenders.
Income limits – Your household income must be below the limit for your area size. Higher incomes allow bigger loan amounts.
Cash reserves – Lenders often like to see 3-6 months of mortgage payments available in cash reserves after closing. More reserves provides mortgage qualification flexibility.
The USDA loan calculator takes all these factors into account when estimating the maximum home loan amount you may qualify for. Adjust the inputs to fit your unique situation.
Tips for Using a USDA Loan Calculator
Follow these tips when using an online USDA loan calculator to determine your home buying budget:
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Start conservatively – Begin with a lower home price and adjust up slowly. This prevents overestimating what you can afford.
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Input accurate debts – Make sure to include all installment loans, credit cards, child support, etc. that appear on your credit report.
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Check income limits – Verify your income is below the limit for your area and household size. Exceeding the limit disqualifies you.
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Use actual rates – Compare rates from multiple lenders to find the lowest current rates, don’t just use estimates.
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Consider property taxes – Research taxes in neighborhoods you’re looking in to get realistic estimates.
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Include home insurance – Shop around for home insurance quotes to get an accurate monthly payment.
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Adjust down payment – Start with $0 down since no down payment is required, but see if a small down payment can get you a bigger loan.
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Use multiple calculators – Check results across a few calculator tools for consistency.
Being conservative with the figures and your budget helps prevent disappointment later if you don’t actually qualify for as much home as first thought. Have a little wiggle room in case rates or expenses come in higher than expected.
Prequalifying for a USDA Loan
The USDA loan calculator provides an estimate, but to get an accurate picture of your eligibility, go through full prequalification with a lender.
Prequalification involves:
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Submitting financial documents like pay stubs, W-2s, and bank statements so the lender can verify your income, assets, and liabilities.
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A soft credit check to review your credit report and scores.
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Discussing your down payment plans and desired loan amount.
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Reviewing the types of homes and locations you’re interested in.
After prequalification, the lender issues a letter stating the maximum USDA loan amount you are eligible for based on the lender’s underwriting standards. This helps you shop confidently knowing your price range and mortgage approval odds.
Later on, as you make an offer on a home, you’ll go through full mortgage underwriting and receive a firm approval letter with final terms. But for initial planning, prequalification provides critical insight into your budget and eligibility for USDA financing.
Sample USDA Loan Calculators
Here are some free online USDA loan calculators to try:
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NerdWallet USDA Loan Calculator – Adjustable with detailed rate tables
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Bankrate USDA Loan Calculator – Simple with loan analysis
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LendingTree USDA Loan Calculator – Allows property tax and insurance estimates
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MortgageCalculator.org USDA Calculator – Provides amortization schedules
Calculate your affordable price range with a few different tools. Prequalification will ultimately determine your exact USDA loan eligibility. But starting early with online calculators helps you set realistic expectations.
Next Steps After Using the USDA Loan Calculator
Once you have a sense of your potential USDA mortgage amount, here are some next steps:
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Narrow your home search to stay within your prequalified amount and search only in USDA-eligible rural areas.
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Get prequalified and then preapproved with a USDA-approved lender who can walk you through the process.
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Make sure your credit is in good shape and take steps to improve it if needed before applying.
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Document all your income, assets, debts, and expenses to provide the lender for underwriting.
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Determine if you can save a small down payment of even 3-5% to reduce your mortgage amount and interest costs.
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Shop for homeowners insurance quotes to estimate your expected monthly premium.
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Read up on USDA loan guidelines and tips for first-time home buyers.
The USDA loan calculator helps estimate your price range and maximum affordable home loan amount. But getting prequalified, improving your credit, and learning the USDA loan process are critical next steps to actually buying a home with USDA financing. Do your homework before making the big purchase.
FAQs About USDA Loan Affordability Calculators
Can I get prequalified for a USDA loan online?
You can start the prequalification process online by entering information on lender websites. But you’ll need to provide financial documents and complete forms before receiving a prequalification letter.
Do USDA loans require a down payment?
No, USDA loans offer 100% financing so no down payment is required. But paying one can lower your loan amount and interest costs.
How accurate are online USDA loan calculators?
They provide estimates using typical lending standards. Prequalification verifes your exact loan
How we got here
No mortgage calculator will get down to the dime on what your monthly payment will truly be — too many variables are subject to change. Your homeowners insurance premium might end up being more than you expect, or maybe you’ll get a slightly different interest rate than the one you’re inputting.
But the NerdWallet USDA loan payment tool is a true PITI mortgage calculator, which means we include principal and interest. We take the process a step further and consider taxes and insurance, too.
The amounts factored in for taxes and insurance are estimated, but it’s a lot more accurate than not considering them at all.
Even more importantly, we add the mortgage insurance premium — the USDA calls it a guarantee fee — into the payment calculation. The USDA requires a monthly insurance premium of 0.35% of the cost of your total loan, to help the government defray the cost of loans that default.
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.