Some of my favorite closings are in small towns: a young family buying in a town of 1,500 people where they grew up, or a couple trading city life for a few acres. For a lot of those buyers, the USDA loan is the reason they could do it with little or no savings.

What a USDA loan is

The USDA Single Family Housing Guaranteed Loan Program is backed by the U.S. Department of Agriculture to encourage homeownership in rural areas and small towns. You don't need to be a farmer, and the home doesn't need to be a farm. The big benefit is no down payment required for eligible buyers.

Three things have to line up

1. The property location

The home has to be in a USDA-eligible area. That covers most small towns and rural areas in Iowa, Illinois, Missouri, Kansas and Wisconsin. Some areas just outside larger cities qualify too. You can check any address on USDA's eligibility map.

2. Your household income

Total household income has to be at or below USDA's limit for the county and your household size. The limits are moderate-income limits, not low-income, so many working families qualify.

3. You live there

The home must be your primary residence. USDA loans aren't for second homes or rentals.

Costs to know

USDA loans have an upfront guarantee fee, which is usually rolled into the loan, plus a smaller annual fee paid monthly. For many buyers, those fees cost less than FHA mortgage insurance. Sellers can also contribute toward your closing costs.

Why USDA fits small-town buying so well

  • Zero down keeps your savings available for moving costs and an emergency fund.
  • Small-town prices often fall well within income limits.
  • Flexible credit compared with some conventional options.

Small-town homes can come with their own considerations, like wells, septic systems and fewer comparable sales for the appraisal. Here's my guide to buying a home in a small town.

Wherever you're buying

I work with buyers in small towns all over Iowa and in the other states where I'm licensed: Illinois, Missouri, Kansas, Wisconsin and Colorado. The whole process can be done remotely, with e-signatures and a local title company or attorney for closing.

Send me the address you're looking at and I'll check USDA eligibility for you. More details on my USDA loans page.