Payment with the upfront and annual guarantee fees, 0% down
Updated 2026-10-02
A USDA home loan can cover the full price of a home in an eligible rural area, with no down payment and no PMI. Instead it charges an upfront guarantee fee, usually added to the loan, and an annual fee paid monthly. Enter the price, your rate, taxes and insurance to see the full monthly payment. The fees default to USDA's fiscal year 2026 rates (1% and 0.35%); the rate is an example. Compare with an FHA loan · VA loan.
The home and the loan
Your USDA payment
Monthly payment
$2,428.09
principal, interest, annual fee, tax and insurance
Principal and interest
$1,915.17
on a $303,000 loan
Annual fee (first year)
$87.93
a month; about $20,809 over the loan
Upfront guarantee fee
$3,000
cash at closing (down payment + fee if paid): $0
Estimates for planning, not a loan offer or financial advice. Every rate and cost here is a number you enter or an example you can change; confirm figures with your lender.
How the USDA payment is calculated
Base loan = Price − Down payment Upfront fee = Base loan × upfront % Loan = Base loan + Upfront fee (if financed) Monthly = P&I on the loan + Annual % × average balance this year ÷ 12 + tax ÷ 12 + insurance ÷ 12
Principal and interest uses the standard fixed-rate formula. The annual fee is a percentage of the average scheduled unpaid principal balance for each year of the loan, charged in 12 monthly parts, so it shrinks slowly as you pay the loan down and runs for the life of the loan.
Worked example
A $300,000 home with nothing down has a $300,000 base loan. The 1% upfront fee is $3,000; financed, the loan becomes $303,000, slightly above the price. At 6.5% for 30 years the principal and interest is $1,915.17, the annual fee adds $87.93 a month in year one, and $3,600 of tax and $1,500 of insurance a year add $425.00, for $2,428.09 a month. On a $400,000 home the same rate gives $2,553.55 of principal and interest plus $117.24 of annual fee.
USDA vs FHA vs conventional
Down payment. USDA allows 0% down in eligible areas. FHA needs at least 3.5% (see the FHA calculator), and a conventional loan with less than 20% down carries PMI (see when PMI comes off).
Ongoing insurance. USDA's annual fee is lower than most FHA annual MIP rates, but like FHA MIP on low-down loans it lasts for the life of the loan, while conventional PMI can be cancelled.
Check what you can afford with the affordability calculator and your ratios with the DTI calculator, and price your closing with the closing cost calculator. Results are estimates for planning; your Loan Estimate shows the actual terms and fees.
Frequently asked questions
What are the USDA guarantee fees?
USDA Rural Development's notice for fiscal year 2026 (October 1, 2025 to September 30, 2026) set an upfront guarantee fee of 1% of the loan and an annual fee of 0.35%, for purchases and refinances alike. USDA sets the fees each fiscal year and the date of its conditional commitment decides which year's fees apply, so check the figures on your Loan Estimate and change them above if they differ.
How much is the payment on a $300,000 USDA loan?
With no down payment and the 1% upfront fee financed, a $300,000 home is a $303,000 loan. At an example rate of 6.5% for 30 years, principal and interest is $1,915.17 a month and the annual fee adds about $87.93 in the first year. Example property tax and insurance bring it to $2,428.09.
Does a USDA loan have PMI?
No. USDA loans have no private mortgage insurance; the upfront and annual guarantee fees take its place. Unlike conventional PMI, the annual fee does not stop at 78% loan-to-value. The calculator charges it for the life of the loan.
How is the USDA annual fee calculated?
It is a yearly percentage of the average scheduled unpaid principal balance, divided into 12 monthly charges, so it falls a little each year as the balance falls. Over 30 years on the example loan the annual fee adds up to about $20,809.
Can I pay the upfront fee in cash instead?
Yes. You can finance the upfront fee or pay it at closing. Paying the $3,000 in cash on the example home keeps the loan at $300,000 and lowers principal and interest to $1,896.20 a month.
Who can get a USDA loan?
The home must be in an eligible rural area and the household income must be within the program limit for the area. USDA's eligibility site lets you check an address and your income. The lender also reviews credit and debt-to-income like any mortgage.