Both help buyers with modest savings. USDA usually costs less but only works in eligible areas and under an income limit; FHA works anywhere, for any income.
Side by side
| USDA loan | FHA loan | |
|---|---|---|
| Where | USDA-eligible areas, including many small towns and outer suburbs | Anywhere |
| Income limit | Household income must be under the county limit | None |
| Mortgage insurance | An upfront guarantee fee and an annual fee, usually lower than FHA’s | An upfront premium and an annual premium, usually for the life of the loan |
| Loan limit | No set limit; your income and the area set the ceiling | Set by county |
| Credit | Standard credit expectations | More flexible on credit |
| Property | Primary home, one unit | Primary home, one to four units |
When a USDA loan fits
- The home is in a USDA-eligible area.
- Your household income is under the limit for the county.
- You want the lowest mortgage insurance cost.
When an FHA loan fits
- The home isn’t in an eligible area, or your household earns too much for USDA.
- Your credit needs FHA’s flexibility.
- You’re buying a two- to four-unit home to live in.
Guides and calculators
Questions
Are USDA loans only for first-time buyers?
No. Repeat buyers can use USDA too, as long as the home is in an eligible area, it will be your primary home and your household income is under the limit.
Is a USDA loan cheaper than an FHA loan?
Usually, because its guarantee fees are lower than FHA’s mortgage insurance. The rate depends on your file, so I price both when you qualify for both.
How do I know if a home is in a USDA-eligible area?
USDA publishes an eligibility map by address. Send me the address and your household size and income, and I’ll check both the property and the income limit.
