How Does USDA Home Loan Calculator Work?

Have no money but want to buy a home with a USDA loan? The USDA loan calculator includes the distinctive features of USDA loans so you can properly apply and budget for your new home. Let’s take you through the relevant details you need to know about it.

USDA Home Loan Calculator

USDA loan calculator helps you estimate your monthly mortgage payments, including taxes and insurance, to give you a better idea of what to expect when financing your home purchase using the USDA loan program.

USDA loans differ from other mortgage options, so this calculator is designed to account for the unique benefits and costs of using a USDA home loan.

How USDA Loan Calculator Works

The above USDA mortgage calculator details costs associated with USDA loans or with home buying in general.

However, many buyers don’t know why each cost exists. Below are descriptions of each cost.

1. Principal and Interest

This is the amount that goes toward paying off the loan balance plus the interest due each month.

This remains constant for the life of your fixed-rate loan.

2. Property Tax

The county or municipality in which the home is located charges a certain amount per year in taxes.

This cost is split into 12 installments and collected each month with your mortgage payment.

The calculator estimates property taxes based on averages from

3. Homeowners Insurance

Lenders require you to insure your home from fire and other damages.

This fee is collected with your mortgage payment, and the lender sends the payment to your insurance company each year.

4. HOA/Other

If you are buying a condo or a home in a Planned Unit Development (PUD), you may need to pay homeowners association (HOA) dues.

Lenders factor in this cost when determining your ratios. (See an explanation of debt-to-income ratios above).

You may put in other home-related fees such as flood insurance in this field, but don’t include things like utility or maintenance costs.

5. USDA Mortgage Insurance

The agency charges an annual fee which is paid in 12 equal installments along with the mortgage payment.

The fee is equal to 0.35% of the loan amount per year.

The fee is much lower than FHA mortgage insurance or even most conventional PMI rates.

6. Upfront USDA Fee

The USDA charges an upfront fee which is rolled into the loan amount. The amount of the fee is currently 1.0% of the loan amount.

The fee goes to USDA to defray the costs of running the program.

The agency is able to offer these loans at discounted rates and down payments in part because of this fee.

7. Loan Term

The number of years it takes to pay off the loan (assuming no additional principal payments).

Note that USDA loans come in 30- or 15-year options.

8. Down Payment

This is the dollar amount you put toward your home cost.

USDA requires no down payment, but buyers can make a down payment if they desire.

Down payments can come from a down payment gift or an eligible down payment assistance program.

How Does USDA Loan Payment Breakdown Look Like?

USDA Home Loan Calculator

A USDA loan calculator gives you the total estimated monthly payment and a monthly breakdown showing how your payment is calculated.

You will find the following with your USDA Home Loan Calculator:

1. Principal & Interest

2. Taxes

3. Insurance

4. USDA Annual Fee

These calculations are based on your exact inputs, as described.

Principal denotes the money you’ve borrowed to purchase your home and builds up in the form of equity as each monthly payment is made.

This table compares the cost of making no down payment, a 3% down, and a 5% down on your loan.

Mortgage DetailsNo Down Payment3% Down ($7,500)5% Down ($12,500)
Amount Borrowed$250,000$242,500$237,500
Upfront Guarantee Fee$2,500$2,425$2,375
Monthly Principal & Interest Payment$1,054.01$1,022.39$1,001.31
Monthly Taxes, Insurance, & MIP$381.25$379.06$377.60
Total Monthly Mortgage Payment$1,435.26$1,401.45$1,378.91
Total Interest Costs$129,444$125,560$122,971

The results indicate making a small down payment lowers the amount you borrowed. If you don’t make a down payment, your upfront guarantee payment will cost $2,500.

Whereas with a 3% down, it’s reduced to $2,425, while a 5% down reduces the upfront guarantee fee to $2,375.

Savings are most evident when we approximate the total interest costs. With no down payment, your total interest will read $129,444.

However, if you pay 3% down, your interest charges will decrease to $125,560, while a 5% down will reduce your total interest costs to $122,971.

Note that a 3% down will save you $3,884 on total interest charges, while a 5% down will save you $6,473.

Meanwhile, the higher your down payment, the more you’ll save on interest costs.

Overall, it significantly lessens your total interest charges over the life of the loan.

The following table underscores the cost of these fees on a $250,000 home:

Fee TypeUpfront FeeAnnual Fee
Upfront Amount$2,500 rolled into loan$0
Annual Amount$0$875.00
Equivalent Monthly Amount$0$72.92

How is the USDA Annual Fee Calculated?

The U.S. Department of Agriculture charges a fee to help fund the USDA loan program.

Currently 0.35% of your total loan amount, the fee is re-calculated annually and included in your monthly payment for the life of the loan.

USDA loans don’t require Private Mortgage Insurance (PMI) even if you don’t have a down payment, because the annual fee allows the USDA to insure your mortgage.

First off, a big pat on the back for all the research you’re doing. Using our USDA mortgage calculator helps you confidently decide just how much house you can afford.

Step-by-step, here’s how to go about calculating the USDA home loan:

1. Input the purchase price of the home you’re considering or your best guess of how much house you can afford.

2. USDA loans usually don’t require a down payment, but you can enter a figure here if you are considering putting some money down. Zero works too.

3. Next, enter the interest rate you expect to qualify for. Our mortgage rate tool can help you pin that number down.

4. Finally, select how long your repayment term will be — 15 or 30 years.

The results will show your total monthly cost and the total cost of the loan over the term you selected.

You can also choose to break down the monthly or total costs in detail.

Now that you have a good idea of what your loan will cost, you’ll be ready to shop for the best USDA lender for your particular situation.

What are the Eligibility Requirements for USDA Loans?

USDA Home Loan Calculator

USDA loans are typically available to those who meet the following qualifications:

1. Purchasing a home in a USDA-eligible area (most areas outside major cities are eligible)

2. Income at or below 115% of the area’s median income

3. A credit score of 640 or higher (although some lenders accept lower scores with compensating factors)

4. A debt-to-income ratio of 41% or less (higher DTI acceptable with compensating factors)

5. 1-2 years of consistent employment history (most likely 2 years if self-employed)

6. A home that meets USDA property standards

Note that the moderate-income guarantee loan limit is the same in any given area for households of 1 to 4 people, and is set to another level for homes of 5 to 8 people.

The following table lists examples of limits from a few select areas in the US:

Location1 to 4 Person Limit5 to 8 Person Limit
Fort Smith, AR-OK MSA$110,650$146,050
Northwest Arctic Borough, AK – with a road system (115%)$124,300$164,100
Northwest Arctic Borough, AK – without a road system (150%)$192,850$254,550
Oakland-Fremont, CA HUD Metro$161,200$212,800
San Francisco, CA HUD Metro$238,200$314,400

The floor values on the limits above are $110,650 and $146,050, respectively. Homes with more than 8 people in them can add 8% for each extra member.

You can confirm income limits in your local area by checking the USDA income limits page, or you can use the eligibility checker to enter your personal details.

How Do USDA Loans Compare Against Normal Conforming Mortgages?

USDA Home Loan Calculator

On regular conforming mortgages, private banks offer funding & typically desire borrowers to put down 20% of the home’s value to minimize the risk of loss to the lender in the event a foreclosure takes place.

If the borrower puts less than 20% down they are required to pay property mortgage insurance (PMI) until the loan balance to home value (LTV) falls below 80%.

USDA loans do not require a downpayment, but they do have two important fees associated with them.

One is an upfront funding fee and another is an annual fee that acts similarly to PMI. The upfront fee can be rolled into the loan.

Periodically the fees associated with a USDA loan change to reflect the costs of running the program.

The last major change was announced on September 1, 2016 when the upfront guarantee fee dropped from 2.75% to 1%, and the annual fee was lowered from 0.5% to 0.35%.

Both the upfront funding fee and the annual insurance premium are far cheaper on USDA loans than the equivalent FHA fees.

To outline the difference between USDA loans and conventional loans, we made the table below:

QualificationsUSDA LoansConventional Loans
Required AreaPMI costs in 0.5%-1% of the loan amount annually
PMI is canceled when the mortgage balance is below 80%
May require a prepayment penalty
Choose a home location anywhere
Income LimitYour household income cannot exceed 115%
of the median income in your area
Does not impose income limits
Credit ScoreShould be at least 640
Some accept as low as 620
680 & up is usually approved
700 & up is ideal
RatesComes with lower rates because of federal fundingYou can obtain a lower rate with a higher credit score
Making a high down payment helps decrease your rate
Down PaymentNot required Offers 100% financing20% eliminates PMI
10% is the average down payment
3% required minimum for a 97-3 loan
Front-end DTIShould not go over 29%Should not go over 28%
Back-end DTIShould not go over 41%It must be a USDA rural area
CostUsually does not go over 43%
Compensating factors, can be up to 50%
Usually does not go over 43%
Compensating factors can be up to 50%

What is the Highest Loan Amount for USDA?

In most U.S. housing markets, the USDA loan limit for Single-Family Direct Loans stood at $336,500 in 2022.

However, if you’re buying in an area with higher housing prices, loan limits may be higher.

For instance, in Wake County, N.C., the loan limit is $336,500. In Clark County, Wash., a homebuyer could borrow up to $478,400.

In summary of USDA Home Loan Calculator, USDA loans help first-time home buyers and we’re not just talking about farmers and ranchers.

On the other hand, since it’s strictly limited to USDA rural areas, finding the right location may be challenging.

Moreover, it may not be an option particularly if you have a stable job in the city.

Note that USDA loans also cannot be used for vacation homes or investment property that generates income.

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