USDA loans: no down payment outside the city

Getting to the closing table

"No down payment" doesn't mean nothing is due at closing. You'll still have closing costs, prepaid taxes and insurance. Two things can bring that down:

• Seller credits

  Credits toward your closing costs, which your agent can request in your offer.

• LifeStart assistance

  LifeStart, RanLife's in-house down payment assistance, can be used with USDA.

With both, some buyers come to the table with little or nothing out of pocket. We'll show you an estimated cash-to-close figure before you make an offer.

Where USDA can work around Charlotte

"Rural" is broader than most people expect. The USDA map includes plenty of small towns and areas on the edges of growing suburbs, not just farmland. Buyers looking near Concord, Salisbury, Monroe or Gastonia often find homes worth checking. The map does change, and eligibility can come down to one side of a road, so send us the address before you fall in love with a house.

How the income limit works

USDA looks at the income of everyone in the household, not just the people on the loan. If your adult child lives with you and works, their income counts toward the limit even if they aren't buying the home. Some deductions apply, such as for dependents and certain child care costs. Limits differ by county and household size, and we check the current limit for the county you are buying in.

Property rules

The home must be your primary residence. It can't be used mainly to earn income, so a working farm or a property built for rental doesn't qualify. The home also needs to be in safe, livable condition, which the appraisal confirms.

USDA fees

USDA loans have two fees. The upfront guarantee fee is usually added to the loan amount, so you don't pay it in cash. The annual fee is split into monthly amounts and added to your payment. Both are lower than the mortgage insurance on an FHA loan, which is one reason USDA can be the lower-cost option when a home qualifies.

USDA or FHA?

If the home is in an eligible area and your income is under the limit, USDA usually costs less each month than FHA because its fees are lower and there is no down payment. If the home doesn't qualify, or your household income is over the limit, FHA is often the next place to look. New to buying? Our first-time homebuyer guide covers the basics.