Best USDA Mortgage Lenders

When it comes to mortgage types, USDA loans can be an attractive option. These loans have many benefits, including lower interest rates and no down payment requirement. To get the most out of a USDA loan, it’s important to find the right USDA mortgage lenders. The right lender can help you save money and make the process of purchasing your next home as smooth as possible. 

Quick Look: Best USDA Mortgage Lenders

• Best for Personalized Service: CrossCountry Mortgage
• Best for Educational Resources: PNC Bank
• Best for Comparing Options: Credible Mortgage
• Best for Military Families: Veterans United
• Best for Customer Support: New American Funding

5 Best USDA Mortgage Lenders

USDA mortgages are common, so there are plenty of lenders to choose from. Remember that each lender must abide by the USDA’s requirements for the mortgage and may add additional requirements as well, as per their needs. 

1. Best for Personalized Service: CrossCountry Mortgage

Cross-country Mortgage is a lender that offers a wide variety of purchase and refinance loans, including USDA home loans and USDA Rural Streamline Finance loans. You can apply for either loan on the CrossCountry Mortgage website. The application guides you through the steps and you’ll be given loan options and personalized rates based on your information. If you receive preapproval, the company will also guide you through the closing process.

Why We Love It: We love CrossCountry Mortgage for its personalized customer service and dedicated loan officers to help with each application. Cross-country Mortgage also operates in all 50 states and has hundreds of branches nationwide, making it an accessible option.

2. Best for Educational Resources: PNC Bank

PNC Bank is another lender that offers a wide variety of loan types. It primarily focuses on jumbo loans but also offers USDA loans and other mortgage options for low-to-moderate-income borrowers. You can start the preapproval process for a mortgage from this lender online or schedule an appointment with a mortgage officer at an in-person location.

Why We Love It: PNC's website shares current interest rates. The lender also offers online tools, including estimated monthly payments, a mortgage scenario builder and more. 

3. Best for Comparing Options: Credible Mortgage

Credible is a personal finance marketplace that helps borrowers compare loans, including mortgages, student loans and personal loans. The marketplace allows you to explore loans and get personalized loan rates.

Why We Love It: We love that Credible is a straightforward marketplace. It is 100% free to use and using the marketplace does not impact your credit score. The company also refers to itself as the most ethical marketplace and states that it does not sell your data.

4. Best for Military Families: Veterans United

Veterans United is a lender dedicated to helping Veterans and military families achieve ownership. This lender primarily offers VA loans and conventional, FHA and USDA loans. Veterans United typically requires a credit score of at least 620 to qualify for a loan. 

Why We Love It: We love Veterans United for its dedication to military families and Veterans. The company offers quick and easy online quotes and personalized customer support. Veterans United has a team of Home Loan Specialists available 24/7 to answer any questions about its loans and loan programs. 

5. Best for Customer Support: New American Funding

New American Funding offers a diverse array of products and competitive pricing to all of its borrowers. For USDA loans, the lender requires a minimum credit score of 580. Borrowers can request a quote online to start the process.

Why We Love It: We love New American Funding for its strong reputation for providing stellar customer support. We also love the lender’s rate transparency and the wealth of information on its website. 

What Is a USDA Mortgage Loan?

A USDA loan is a government-backed loan designed to help low-to-moderate-income borrowers achieve homeownership in rural areas. The USDA (U.S. Department of Agriculture) sets the eligibility requirements and assigns the areas in which properties are eligible for USDA loans. These are fixed-rate loans, and there is no down payment requirement on these loans.

USDA Guaranteed Loans

USDA Guaranteed Loans are when a lender partners with the USDA to issue the mortgage and the USDA backs it. These loans work similarly to VA and FHA loans. The lender is in charge of underwriting the loan, but they can offer lower interest rates, and the USDA will approve the loan. 

USDA Direct Loans

USDA Direct Loans are issued directly to the borrower from the USDA, cutting out the lender as the middleman. These loans are designed specifically for low-income households and can offer very low interest rates, some as low as 1%.

How Does a USDA Mortgage Work?

USDA loans are only available for homebuyers in eligible areas as defined by the USDA. The properties are located within communities defined as rural by the USDA. The USDA reassesses the areas every three to five years to determine whether they are still eligible. There are certain criteria that the USDA uses to define whether an area meets its definition of “rural” — this includes the population of the area as well as the median income of the population. 

Pros and Cons of USDA Mortgages

There are many benefits to a USDA mortgage. However, there are some downsides to consider as well. 

Who Is Eligible for a USDA Loan?

• The property you are purchasing must be your primary residence. 
• The property must be in an eligible area. You can use an interactive map on the USDA website to determine whether the property is in an eligible area. 
• There must be an appraisal of the property to ensure that the loan amount does not exceed the property’s value. The appraisal will also ensure that the property meets USDA’s standards for USDA loans.
• You must be a U.S. citizen, a U.S. non-citizen national, or a lawful permanent resident. 
• You must have a reliable income source and provide proof of income.
• You must have a strong credit history and a minimum credit score of at least 580. Some lenders may require a higher minimum credit score — 620 and 640 are common requirements. 
• You must meet the income requirements — this varies by location but typically your income cannot exceed more than 115% of the median income of the area where your property is located.

How to Apply for a USDA Mortgage

Applying for a USDA mortgage is similar to applying for other mortgage types. However, there are some differences. 

Find and Compare a USDA-Approved Lender 

Most lenders offer conventional mortgages, but the same can’t be said for USDA loans. You’ll need to research and lenders who are approved to offer USDA mortgages. The lender will need to be familiar with the process of a USDA mortgage, so finding a lender with experience with this mortgage type is important.

The most efficient way to compare USDA-approved lenders is to use a financial marketplace or website such as Benzinga to compare their highlights side-by-side. Look for the lender’s current rates, requirements, and customer service rating. 

Gather Necessary Documents

Once you’ve narrowed down the lenders you might want to work with, it’s time to get your documents together. Your lender will give you a list of documents that are required as part of your application. Most people can expect to be asked for proof of income, recent bank statements, recent tax returns and more. However, you might be asked for additional or different documents depending on your financial situation and your source of income. 

Get Pre-Approved

As with any mortgage process, getting preapproved can be a key step. Most lenders offer a preapproval process that will estimate how much you will be approved to borrow. You can use this information to help you determine which homes are within your budget.

Find a home

Once you have your preapproval, you can work with a real estate agent to find your new home. A preapproval letter can strengthen the power of your offer if you find a home that you want to purchase. 

Apply for the Loan

After you’ve placed an offer on a home and it has been accepted, you’ll work with your lender to submit a formal mortgage application. At this point, the lender will also schedule the appraisal, perform a title search and pursue other necessary procedures. 

Close on the Loan

A closing date will be set after your loan has been approved and all procedures have been completed. At this time, you’ll meet with your lender to sign the paperwork and make payments if required. You’ll also receive the keys to your home. 

Should I Get a USDA Loan?

If you’re in the market for a new home, it could be worth exploring the option of a USDA loan. You can visit the USDA website to explore the requirements and see which areas currently meet the USDA eligibility requirements. If you’re not interested in buying a home in any of those areas, you can cross a USDA loan off your list of options. However, if you’re open to those areas and think you might meet the income requirements, there’s no harm in reaching out to lenders who offer USDA mortgages to see if you qualify.  

Frequently Asked Questions