1. Section 502 Direct Loan (USDA‑funded)

• Intended for very low‑income or low‑income borrowers purchasing in USDA‑designated rural areas.

• Repayment terms: Up to 33 years, and up to 38 years for very low‑income borrowers

• No down payment required. Eligibility depends on income limits, citizenship, and ability to afford repayment 

2. Section 502 Guaranteed Loan

• Meant for low-to-moderate income borrowers, up to 115% of area median income.

• Loan is underwritten by private lenders and guaranteed 90% by USDA—allows non‑down payment, 30‑year fixed mortgages 

🔍 Important Factors to Consider

• Payment Subsidy: Direct loan applicants may receive subsidy based on income, reducing effective interest rate to as low as 1% 

• Guarantee / annual fees: USDA loans include an upfront guarantee fee (typically 1% of loan amount) and an annual fee (0.35% of outstanding balance) instead of private mortgage insurance 

• Eligibility: Property must be in USDA‑eligible rural areas; household income must be below area thresholds; borrower must occupy the home as primary residence

• Credit Score & DTI: Stronger credit and lower debt‑to‑income ratios usually result in lower rates. While USDA doesn’t always enforce a minimum FICO, lenders often prefer 640+ 

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📅 Schedule your free consultation to explore your options!

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