For many rural buyers and first-time farmers, USDA land loans are one of the most affordable ways to buy property. They come with low rates, flexible repayment, and in some cases no down payment at all. Still, most people wonder two things before applying: “Do I qualify?” and “What will my monthly payment look like?”
This guide explains USDA land loan eligibility rules, fees, and examples of payment calculations so you know exactly what to expect.
What Is a USDA Land Loan?
A USDA land loan is a government-backed program that helps buyers purchase farmland or rural property in approved areas. Unlike conventional loans, USDA programs are designed to make rural ownership more accessible. Key benefits include:
- 0% down payment options in eligible cases
- Below-market interest rates compared to private land loans
- Longer terms (15–30 years) for manageable payments
- Options for farm ownership, operating costs, or site development
👉 To test affordability, you can use a dedicated USDA land loan calculator.
USDA Land Loan Eligibility Requirements
Eligibility depends on three main areas:
1. Location of the Property
- The land must be in a USDA-designated rural area.
- USDA offers an online map where you can check if your property qualifies.
2. Household Income
- Your income must fall under 115% of the area median income (AMI).
- Income caps vary by county and family size.
3. Borrower Qualifications
- Minimum credit score of 640 is preferred (lower scores may still qualify with manual underwriting).
- U.S. citizenship or eligible non-citizen status.
- A reliable source of income and manageable debt levels.
USDA Land Loan Fees Explained
USDA loans are affordable, but they do come with two unique fees:
- Guarantee fee: 1% of the loan amount, usually financed into the loan.
- Annual fee: 0.35% of the loan balance, added to monthly payments.
These fees replace the need for private mortgage insurance and are often lower than FHA or conventional alternatives.
How to Calculate USDA Loan Payments
Monthly payments are made up of principal, interest, taxes, insurance, and USDA fees. Let’s look at a few examples:
- $100,000 loan at 5.5% for 30 years → about $568/month
- $150,000 loan at 6% for 20 years → about $1,074/month
- $200,000 loan at 6% for 30 years → about $1,199/month
👉 You can run your own scenarios with a land loan payment calculator.
Step-by-Step Application Process
- Check property eligibility with USDA’s rural map.
- Confirm income limits for your household size and county.
- Find a USDA-approved lender in your area.
- Get prequalified, then submit a full application.
- Underwriting review: credit, income, and property appraisal.
- Closing: fees are finalized, loan documents signed, and funds disbursed.
USDA vs Other Loan Programs
| Loan Type | Down Payment | Avg. Rate (2025) | Insurance/Fees | Best For |
|---|---|---|---|---|
| USDA | 0% | 5–6% | 1% upfront, 0.35% annual | Rural land, low-moderate income |
| FHA | 3.5%+ | 6–7% | Mortgage insurance (MIP) | First-time buyers |
| Conventional | 5–20% | 6–7% | PMI if <20% down | Flexible property types |
FAQs: USDA Land Loan Guide
What areas qualify for USDA loans?
Only properties in USDA-designated rural areas, which you can check online.
Do USDA loans require a down payment?
No—many USDA loans allow 100% financing.
What credit score do I need?
A score of 640 or higher is recommended, but exceptions exist.
Can I use a USDA loan for recreational land?
No, the property must be for farming, housing, or rural development.
How do I estimate payments?
Use calculators like the USDA loan calculator or repayment schedule tools.
Tracey is the creator of LandLoansCalculator.com, a trusted resource for accurate and easy-to-use land loan calculators. With a strong focus on clarity and reliability, Tracey is dedicated to helping users understand land financing with confidence. Her goal is to simplify complex calculations so buyers, investors, and professionals can make informed decisions quickly and efficiently.