$0 down USDA loans, explained honestly

By Kaspar Caldwell, REALTOR® · Reviewed

A USDA Rural Development guaranteed loan lets qualified buyers purchase a home in an eligible area with no down payment. Here's what lenders typically require and what to really expect. Your lender confirms every requirement.

Get pre-qualified →Browse eligible homes

USDA loan requirements

Eligible location
The home must be in a USDA-eligible area. Most of North Mississippi qualifies outside larger city limits like Tupelo, Starkville and Columbus.
Primary residence
You must live in the home. No rentals, flips or vacation homes.
Household income limit
Total income of every adult in the home must be at or under USDA's limit for your county and household size. Lenders count adults who won't be on the loan too.
Credit
Most lenders look for about 640 or higher for automated approval. Lower scores can sometimes work with a manual review and strong compensating factors.
Steady income
Lenders usually want 2 years of reliable work history, ideally in the same line of work. Gaps need an explanation.
Self-employed or 1099
Expect to provide your last 2 years of filed federal tax returns. Income is figured after write-offs, so heavy deductions lower what you qualify for.
Debt-to-income
Typical guidelines are about 29% of income for the house payment and 41% for all monthly debts. Some approvals go higher.
No other adequate home
You generally can't already own a decent, safe home within commuting distance.
Citizenship
U.S. citizen, U.S. non-citizen national or qualified alien.
Home condition
The house must appraise and be safe, sound and sanitary. Major issues like roof leaks or failing systems can need repairs before closing.

Realistic expectations

You'll still have some costs
$0 down does not mean $0 out of pocket. Plan for earnest money, inspection, appraisal and closing costs. Sellers can sometimes help cover closing costs.
USDA fees
A 1% upfront guarantee fee (usually rolled into the loan) and a 0.35% annual fee paid monthly.
Timelines
Closings often take 30 to 45 days, sometimes longer because USDA reviews the file after the lender.
Appraisals matter
If the home appraises low or needs repairs, you may need to renegotiate, pay the difference or walk away.
Manufactured homes
Possible only in limited cases: usually new units on a permanent foundation meeting USDA rules. Most older manufactured homes don't qualify.

The 4 steps to buying

From checking eligibility to closing day.

  1. 01

    Check your eligibility

    USDA sets household income limits by county and family size. You can check yours on the USDA eligibility website.

  2. 02

    Get pre-qualified

    Talk with a USDA-approved lender about your credit, income and budget before you shop.

  3. 03

    Find the right home

    Browse homes here, then tour the ones you like. The home must sit in an eligible area and meet USDA property standards.

  4. 04

    Close on your home

    After your offer is accepted, the lender orders an appraisal and completes the USDA review before closing.

Buying in Tupelo, Starkville or Columbus?

Those city areas are not eligible for $0 down USDA loans. An FHA loan with 3.5% down is usually the best option there. Kaspar can help you compare.

What this site shows

  • Homes priced under $400,000 in USDA-eligible areas of North Mississippi.
  • Homes in these ZIP codes are left out because they are not USDA-eligible: 38801, 38804, 39759, 39701, 39702, 39705 (Tupelo, Starkville and Columbus).
  • Monthly payments are estimated principal & interest only, with 0% down and the 1% USDA upfront fee financed. Taxes, insurance and the annual USDA fee are extra.

Eligibility shown here is a guide, not a loan approval. Kaspar Caldwell is not a lender.