Virginia homebuyers seeking zero down payment financing have a powerful option many overlook: USDA loans. Despite the agricultural-sounding name, USDA loans serve homebuyers throughout much of Virginia, including areas near major cities like Richmond, Norfolk, and Roanoke. In fact, approximately 88% of Virginia's land area qualifies for USDA financing.
A USDA loan is a mortgage backed by the U.S. Department of Agriculture's Rural Development program. Designed to promote homeownership in rural and suburban communities, USDA loans offer several advantages that make them attractive to first-time buyers and anyone with limited savings.
The program has helped over 24,586 Virginia families purchase homes, with 83% going to first-time buyers. The average Virginia USDA loan balance is $147,522, with typical home values around $151,492.
Finance 100% of the purchase price. No down payment required.
Often lower than conventional rates due to the government guarantee.
Significantly cheaper annual fees than FHA mortgage insurance.
"Rural" includes many suburbs. 88% of Virginia land qualifies.
| Program Type | Rate Range | Who It's For |
|---|---|---|
| USDA Guaranteed (30-Yr Fixed) | 5.56% - 6.39% | Moderate income (up to 115% AMI) |
| USDA Direct (Section 502) | 5.125% | Very low income (subsidized) |
Your actual rate depends on several factors including credit score, debt-to-income ratio, loan amount, and current market conditions. Borrowers with 740+ credit scores typically qualify for the lowest rates.
Your household income cannot exceed 115% of the Area Median Income (AMI).
Note: USDA counts income from ALL adults in the household, even if they aren't on the loan.
The home must be your primary residence and meet safety standards.
Don't let "rural" fool you—the USDA defines this broadly. Areas with populations under 20,000 often qualify, including many suburbs and small towns. 88% of Virginia is eligible.
USDA loans don't have "PMI", but they have guarantee fees. These are significantly cheaper than FHA mortgage insurance.
Of loan amount. Usually financed into the loan.
Paid monthly. Based on remaining balance.
| Fee Type | USDA | FHA | Savings |
|---|---|---|---|
| Upfront Fee | 1.00% | 1.75% | 0.75% |
| Monthly Fee | 0.35% | 0.55% | 0.20% |
| Monthly Cost ($250k) | $73 | $115 | Save $42/mo |
While USDA loans require no down payment ($0), you still have closing costs (2-6% of price). Here is how to cover them without cash:
Ask the seller to pay your closing costs in the offer. You can ask for up to 6% of the sales price, which usually covers everything.
If the home appraises for more than the purchase price, you can finance the closing costs up to the appraised value.
Family members can gift you 100% of the funds needed for closing.
The USDA offers two distinct loan programs. Most homebuyers will use the Guaranteed loan.
Most Common
For Very Low Income
Verify income and property location on USDA website.
Submit docs to a USDA-approved lender. Get your letter.
Work with an agent to find a home in an eligible area.
Negotiate seller concessions for closing costs if needed.
Lock rate and submit full file. Lender orders USDA appraisal.
Lender reviews file. Appraisal checks value and safety.
File goes to USDA office for final sign-off.
Sign docs, get keys. No money down!
For current USDA borrowers with clean payment history (12 months).
For borrowers facing hardship or negative equity.
| Feature | USDA | FHA | Conventional |
|---|---|---|---|
| Down Payment | 0% | 3.5% | 3-20% |
| Monthly Insurance | 0.35% | 0.55% | ~0.5-1% |
| Location Limit | Yes (Rural) | No | No |
| Income Limit | Yes (115% AMI) | No | No |
Mistake: Falling in love with a home in an ineligible area.
Fix: Check the map first.
Mistake: USDA counts ALL household income (even non-borrowers).
Fix: Calculate total household income carefully.
Mistake: Recent late payments can disqualify you.
Fix: Ensure clean 12-month history.
Mistake: Homes must be safe/sound. No major rehabs.
Fix: Stick to move-in ready homes.
Mistake: Rates and fees vary.
Fix: Get 3-5 quotes.
Mistake: New debts lower your purchasing power.
Fix: Freeze spending during process.
Mistake: 0% down doesn't mean $0 cash to close.
Fix: Ask for seller concessions.
Mistake: Employment stability is key.
Fix: Wait until after closing to move jobs.
Yes, if it is on an approved list (FHA/VA/Conventional approved).
No. Previous homeowners are eligible.
No. USDA loans are for primary residences only.
No set max, but income limits naturally cap the borrowing amount.
USDA does not finance the value of in-ground pools (it won't be included in appraisal value).
You must pay the difference or renegotiate. USDA only lends up to appraised value.
USDA Rural Development Virginia
1606 Santa Rosa Road, Suite 238
Richmond, VA 23229
Phone: (804) 287-1500
USDA loans offer Virginia homebuyers an exceptional opportunity to achieve homeownership with zero down payment. See if you qualify today.
No impact on credit score to check
Last updated: November 25, 2025
Disclaimer: Virginia Lending Hub is a lead generation service connecting homebuyers with licensed mortgage professionals. We are not a lender and do not make credit decisions. USDA loan terms, rates, and requirements subject to change. All loans subject to underwriter approval.