USDA loans offer 100% financing (no down payment) for buyers in eligible areas. The program is designed for rural and suburban communities, and while it won't work inside the Beltway, more of the DC metro area qualifies than most buyers expect.
What is a USDA loan?
USDA loans are backed by the U.S. Department of Agriculture through its Rural Development Guaranteed Loan Program. Like FHA and VA, the government guarantee allows lenders to offer favorable terms to borrowers who meet the program's criteria.
The program has two requirements: the property must be in an eligible area, and the borrower's household income must fall within program limits. If you meet both, it's a compelling option, especially compared to FHA, where you're paying upfront MIP plus permanent annual MIP.
Which parts of the DMV are eligible?
USDA eligibility is based on census-designated area classifications, updated periodically. The USDA maintains an online eligibility map where you can search any address.
In the DMV context, here's the general picture:
Not eligible: Washington DC, close-in suburbs in Montgomery County MD (Bethesda, Silver Spring, Rockville), Arlington County VA, Alexandria VA, and most of Fairfax County inside the Beltway.
Commonly eligible: Parts of Frederick County MD, portions of Prince William County VA (particularly further from I-95), much of Loudoun County VA outside of metro areas, Charles County MD, St. Mary's County MD, parts of Stafford County VA, and most areas further out from the urban core.
Check before assuming: Eligibility isn't intuitive. A zip code can be partly eligible and partly not. Search the specific property address, not the zip code.
Check an address.
Search any address in the DMV below. Shaded areas are not eligible for USDA financing. Clear areas are eligible. Data comes directly from the USDA Rural Development MapServer.
Data sourced from USDA Rural Development. Eligibility is subject to change. Always confirm with your lender before making decisions based on this map.
Income limits: who qualifies?
USDA income limits are set at 115% of the area median income (AMI) for the county where the property is located. Because DMV median incomes are high, the income limits are actually higher here than in most parts of the country.
Income limits account for all members of the household, not just the borrowers on the loan. A household of four in Frederick County MD, for example, has a meaningfully higher income limit than a household of two.
USDA income limits are updated annually. Confirm current limits for your specific county and household size with your lender before relying on a number you find online.
What USDA financing actually costs.
USDA loans have two mortgage insurance components, similar in structure to FHA but cheaper:
Upfront guarantee fee: 1.0% of the loan amount. Like the VA funding fee and FHA upfront MIP, this can be financed into the loan. On a $350,000 loan, that's $3,500.
Annual fee: 0.35% of the outstanding balance, charged monthly. On a $350,000 loan, that's about $102/month at the start, less than FHA's annual MIP on a comparable loan.
USDA vs. FHA cost comparison: $350,000 purchase, no down payment vs. 3.5% down:
| USDA (0% down) | FHA (3.5% down) | |
|---|---|---|
| Down payment | $0 | $12,250 |
| Upfront fee/MIP | $3,500 (financed) | $5,951 (financed) |
| Loan amount | $353,500 | $342,751 |
| Annual MI rate | 0.35% | 0.55% |
| Monthly MI | ~$103 | ~$157 |
| MI cancellation | When LTV reaches 80% (refinance or reappraisal) | Never (must refi for <10% down) |
Rates and amounts are illustrative. Actual costs vary by lender and profile.
For eligible buyers, USDA's lower annual fee and zero down payment requirement often makes it more affordable upfront than FHA, even accounting for the guarantee fee.
Other key requirements.
Credit: Most lenders want a 640+ score for streamlined USDA processing. Lower scores may be eligible through manual underwriting, but expect more documentation and scrutiny.
Occupancy: Primary residences only. No investment properties or second homes.
Property condition: USDA has property condition requirements similar to FHA. The home must meet basic safety and habitability standards. Fixer-uppers with significant deferred maintenance may not qualify.
Loan limits: USDA doesn't have a hard loan limit, but your loan size is constrained by the income limits and qualifying ratios. Very high purchase prices may exceed what the program can accommodate given local income limits.
Buying in the DC suburbs? Worth checking if USDA applies to your target area.
It takes about 30 seconds to check eligibility on a specific address. If it qualifies, we can run the numbers and compare USDA to your other options.