USDA mortgages are home loans backed by the U.S. Department of Agriculture. They are available to low- to moderate-income borrowers looking to buy a home in a rural area.
That said, the definition of “rural” doesn’t necessarily mean out in the middle of nowhere. As you can see onthis map, many towns and suburban areas qualify as rural.
USDA mortgages can be 100% financed, so they do not require a down payment. There is also no minimum credit score, but if your score is below 640, your application will need to be manually underwritten.
Mortgage insurance is not required for USDA loans. However, you will be charged a 1% upfront fee (called a guarantee fee) as well as a 0.35% annual fee.
Depending on your income, you can fall into one of two mortgage programs offered by the USDA.
Kentucky First-Time Home Buyer Programs | USDA, FHA, VA & KHC Loans 