USDA Purchase Loans

A Summary of the USDA Loan Purchase

The USDA Purchase

What are USDA purchase loans?

USDA purchase loans are designed for buyers whose household income does not exceed 115 % of the area median and whose chosen property sits in a USDA eligible “rural” zone—often defined as a community of 50,000 residents or fewer, which includes many outer ring suburbs.

Benefits of a USDA Purchase Loan

Frequent Questions Regarding USDA Purchases

Do USDA loans really have no mortgage insurance? They have no private mortgage insurance; instead, they charge the modest up front and annual guarantee fees noted above, which are generally cheaper than PMI.
Can I own another home and still use a USDA loan? Possibly. You must demonstrate the other home is “inadequate,” too far from your new job, or no longer within reasonable commuting distance. Otherwise, simultaneous ownership is usually disallowed.
Are condos or manufactured homes eligible? Yes—if the project or unit meets USDA guidelines and is in an eligible area. Manufactured homes must be new, permanently affixed, and meet HUD code.
How long does USDA underwriting take? After lender approval, the file is submitted to the state USDA office for a final commitment. Turn times vary by state but commonly run 3–10 business days.
Can I refinance out of the annual fee later? Absolutely. Once you’ve built at least 20 % equity—or moved to a non rural area—you can refinance into a conventional loan with no PMI, eliminating the USDA annual fee altogether.

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