Looking to buy a home in Maryland but worried about the down payment? You’re not alone—and there’s good news. The USDA loan program offers a unique path to homeownership with zero down payment, competitive interest rates, and flexible credit guidelines—all backed by the U.S. Department of Agriculture.
Despite common myths, you don’t need to live on a farm or be a first-time homebuyer to qualify. In fact, much of Maryland is USDA-eligible—from Frederick to the Eastern Shore.
What Is a USDA Loan?
A USDA loan (officially the Section 502 Guaranteed Loan) is a mortgage program that helps low- to moderate-income buyers finance homes in eligible rural and suburban areas.
Thanks to a 90% government loan guarantee, lenders can offer:
- 100% financing (no down payment)
- Low fixed interest rates
- Reduced mortgage insurance
Note: You don’t have to be a first-time homebuyer to qualify.
Who Qualifies for a USDA Loan in Maryland?
Income Limits
- Up to $122,050 for 1–4 person households
- Up to $182,550 for 5+ person households
This includes all income from the household—even part-time jobs or side gigs.
Property Eligibility
Your home must be located in a USDA-eligible area. The good news? A significant portion of Maryland qualifies.
Eligible areas may include:
- Frederick (outside city limits)
- Hagerstown
- Salisbury
- Chestertown
- Cumberland
- Parts of Southern & Eastern Shore Maryland
Credit Score & DTI Requirements
- 640 is the typical minimum credit score
- Debt-to-income ratio ideally ≤ 41–43%
- Must not qualify for conventional financing with 20% down and no PMI
Benefits of USDA Loans
100% Financing (No Down Payment)
This is one of the only loan programs (besides VA) that allows zero down.
Lower Interest Rates
Because USDA loans are government-backed, lenders can offer below-market rates.
Reduced Mortgage Insurance
Instead of the traditional monthly PMI, you’ll pay a 1% upfront guarantee fee and a 0.35% annual fee (which is paid monthly).
Roll in Closing Costs
You have the option to use seller concessions, apply gift funds, or roll the costs into the loan if the appraisal supports it.
Guaranteed vs. Direct USDA Loans
USDA Guaranteed Loan
- Issued by approved lenders (like Federal Hill Mortgage)
- Income cap: 115% of area median
- Most common loan type
- Faster closings (30–45 days)
USDA Direct Loan
- Funded directly by the USDA
- Reserved for very low-income buyers
- Longer terms (33–38 years)
- Stricter eligibility + documentation
What Kinds of Properties Qualify?
- Must be a primary residence
- Move-in ready (no major repairs needed)
- Eligible home types: detached homes, townhomes, condos, modular, manufactured
- Cannot be income-producing (no farms, rentals, or duplexes)
USDA vs. FHA vs. VA Loans: A Quick Comparison
Feature | USDA Loan | FHA Loan | VA Loan |
|---|---|---|---|
Down Payment | 0% | 3.50% | 0% |
Credit Score | 640 (preferred) | 580+ | 620+ |
Income Limit | Yes | No | No |
Location Restriction | Yes | No | No |
Mortgage Insurance | Guarantee Fee | Upfront + MIP | None (but funding fee) |
How to Apply for a USDA Loan in Maryland
At Federal Hill Mortgage, we make USDA loans simple and stress-free.
- Same-day pre-approvals
- 24/7 support
- Access to top USDA lenders
- 18+ years of experience in rural and suburban lending
Frequently Asked Questions
-
What are the USDA loan requirements in Maryland?
ou need to meet income, credit, and location criteria. Income must be ≤115% of area median. Credit score of 640 is typical. The property must be in a USDA-eligible rural/suburban area.
-
What is the USDA loan credit score minimum?
Most lenders require 640, but some will consider lower scores with strong compensating factors.
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Can I use a USDA loan more than once?
Yes — as long as your previous USDA-financed home has been sold or paid off.
Ready to Buy a Home With No Money Down?
If you’re dreaming of homeownership but don’t have a big down payment saved, a USDA loan could be your best option in 2025. You don’t have to wait. You just have to get started.
