USDA vs FHA Loans: Which One Is Better?
Compare zero-down USDA loans vs FHA loans and estimate your monthly payment.
| Feature | USDA Loan | FHA Loan |
|---|---|---|
| Down Payment | $0 | 3.5% |
| Credit Score | 620+ | 600+ |
| Location | Rural / Suburban Only | Anywhere |
| Income Limits | Yes | No |
| Upfront Fee | 1.00% Guarantee Fee | 1.75% Funding Fee |
| Monthly MI / Annual Fee | 0.35% | 0.55% |
| Monthly Payment | Often Lower | Often Higher |
USDA vs FHA Payment Calculator
Toggle between USDA and FHA to estimate principal, interest, taxes, insurance, and mortgage insurance.
Estimated Monthly Payment
$0This estimate includes principal, interest, estimated taxes and insurance. FHA estimates include a 1.75% upfront funding fee financed into the loan and a 0.55% annual monthly mortgage insurance factor. USDA estimates include a 1.00% upfront guarantee fee financed into the loan and a 0.35% annual monthly fee factor. Actual payment may vary based on final loan terms, credit profile, property taxes, homeowners insurance, and lender requirements.
USDA vs FHA Loan FAQs
Is a USDA loan better than an FHA loan?
A USDA loan may be better if you qualify for the location and income requirements because USDA loans offer zero down payment and typically lower monthly mortgage insurance costs. FHA may be better for buyers with lower credit scores or buyers purchasing outside USDA eligible areas.
What is the biggest difference between USDA and FHA loans?
The biggest difference is the down payment and eligibility rules. USDA loans allow eligible buyers to purchase with zero down, but the home must be in a USDA eligible area and income limits apply. FHA loans require a minimum down payment but can be used in more locations.
Does USDA have mortgage insurance?
USDA loans do not have traditional private mortgage insurance, but they do have a USDA annual fee. This calculator estimates the USDA annual fee using a 0.35% annual factor and includes a 1.00% upfront guarantee fee financed into the loan.
Does FHA have mortgage insurance?
Yes. FHA loans include mortgage insurance. This calculator estimates FHA mortgage insurance using a 0.55% annual monthly mortgage insurance factor and includes a 1.75% upfront funding fee financed into the loan.
Which loan usually has the lower monthly payment?
USDA loans often have the lower estimated monthly payment because they offer zero down payment and a lower annual fee factor than FHA mortgage insurance. The actual payment depends on the loan amount, rate, taxes, insurance, credit profile, and final loan terms.
Can I qualify for USDA with a 620 credit score?
Many USDA lenders allow credit scores around 620, but approval also depends on income, debt-to-income ratio, property eligibility, credit history, and lender guidelines.
Can I qualify for FHA with a 600 credit score?
Many FHA lenders allow credit scores around 600, but approval depends on the full borrower profile, including income, debts, assets, credit history, and lender-specific requirements.
Find Out Which Loan You Qualify For
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Check My EligibilityNew Applicants: For questions about a mortgage application currently in process, please reach out to your Mortgage Loan Officer. If you are not sure who your Mortgage Loan Officer is, please email our Mortgage Help Desk at mortgagehelpdesk@magnoliabank.com. Customer Feedback: For complaints or to provide feedback, please email complaints@magnoliabank.com.
This communication does not constitute a commitment to lend or the guarantee of a special interest rate. All loan programs and availability of cash proceeds are subject to credit, underwriting and property approval.
