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  • No Down Payment – What is possibly the single most well known benefit of a USDA loan is that they do not require any down payment.
  • Finance Your Closing Costs – You can include the closing costs (loan origination, appraisal, upfront mortgage insurance, etc.) into the loan.
  • Easy to Qualify – The requirements to be eligible are relatively easy compared to conventional loans.  However, they are not available to high income households or in larger cities.  The programs offered by the USDA often are the only mortgage loans available to applicants, which means it can make the difference of someone being able to own their own home or not.
  • Low Mortgage Insurance – The monthly mortgage insurance on USDA loans, called the “guarantee fee” is lower than it is for other government-backed mortgages such as FHA loans.  For USDA guaranteed loans, the monthly guarantee fee is 0.50% of the loan amount, and is adjusted each year as the loan balance decreases, therefore resulting in monthly mortgage payments being lowered annually.
  • Fixed Interest Rates – All USDA home loans are provided on a fixed mortgage rate.  This means that the interest rate stays the same and does not adjust or fluctuate like they do with an adjustable rate mortgage (ARM), which can cause sudden spikes in rates and payments.
  • Higher Loan Limits –  While other loans such as FHA, VA, and conventional loans have strict loan size limitations, there are no such loan limits placed on USDA loans.  This means that if you qualify, you might be able to get a nicer home with a USDA loan than a FHA other other type of loan.