USDA Loan vs Conventional Comparison Calculator

USDA loans are zero-down mortgages backed by the US Department of Agriculture for eligible rural and suburban properties. They're often cheaper than conventional 5% down loans because USDA has no PMI — instead it charges a 1% upfront guarantee fee (rolled into the loan) plus a 0.35% annual fee. Compare both loans head-to-head over a 10-year hold to see your true winner.

USDA Eligibility Requirements

Two main tests: (1) Property eligibility — the home must be in a USDA-designated rural or suburban area. Despite the name, many suburbs of major US cities qualify; check the USDA eligibility map. (2) Income eligibility — household income (all adults, not just borrowers) must not exceed 115% of the area median income for your county. This makes USDA primarily a moderate-income, first-time-buyer program. Credit score minimum is typically 640 with most lenders. The home must be your primary residence — no investment properties.

When USDA Beats Conventional

USDA wins almost always for buyers with limited down payment savings. Zero down preserves cash for closing costs, moving expenses, and reserves. The 0.35% annual fee is roughly half of conventional PMI rates (0.5-1.5%), and unlike PMI, it doesn't disappear at 20% equity — but it's lower throughout. Over a 10-year hold, USDA typically saves $10,000-$25,000 versus conventional 5% down. The main downside is location restrictions and income caps. If you qualify on both fronts, USDA is usually the best low-down-payment option in the US market.

Last updated May 2026. Sources: USDA Rural Housing.