USDA Loans

USDA guaranteed loans are for households with income up to the program’s moderate limit (115% of the area’s median household income) buying in an eligible rural area (USDA).

• Location: the property must be in an eligible area. In Michigan, that includes many small towns and areas outside larger cities. Check an address with USDA’s eligibility map.
• Income: USDA counts the income of all adult household members, not just borrowers, with certain deductions.
• Occupancy: you must live in the home as your primary residence.
• It isn’t limited to first-time buyers.

No down payment is required. The loan can cover up to 100% of the appraised value, and the upfront guarantee fee can be financed on top (USDA).

You’ll still need money for closing costs and prepaid items unless they’re covered by seller contributions (USDA allows up to 6% of the sales price), gifts, or other eligible sources.

USDA doesn’t publish a minimum credit score, but lenders and investors may require one. USDA’s automated system (GUS) evaluates the file; files referred for manual review need fuller documentation.

USDA uses benchmark payment ratios (29% housing and 41% total debt), with flexibility for compensating factors (USDA fact sheet).

USDA charges a guarantee fee instead of mortgage insurance. For fiscal year 2027 (October 1, 2026 through September 30, 2027), USDA set an upfront fee of 1.00% and an annual fee of 0.35% for purchase and refinance loans (USDA Rural Development).

USDA can change these fees each fiscal year; the rates in effect when your loan is guaranteed apply.

1. Is the specific address eligible on USDA’s map today?
2. Which household members’ income counts toward the limit, and what deductions apply?
3. What closing costs and prepaids should I plan for, and can the seller help?
4. How does USDA compare with FHA and conventional for my situation?
5. How might USDA funding timing affect my closing date?