The 8 best USDA lenders for 2023

February 22, 2021 - 11 min read

Compare the best USDA lenders

What’s so great about finding the best USDA lenders? Well, only USDA and VA loans are available with zero down payment. So they’re an affordable route to homeownership for many buyers.

Although USDA loans are backed by the federal government, you still borrow from a private-sector lender. That means different companies will offer you better or worse mortgage rates, loan costs, and customer service.

That makes choosing the best USDA lender essential. You could save thousands by getting and comparing quotes from multiple lenders.

USDA Lender Best Feature(s)*
Movement Mortgage Strong customer review scores, low average USDA rates, great online experience
Freedom Mortgage Corp. Lowest average USDA rates among top lenders
Caliber Home Loans Second-lowest average USDA rates among top lenders
Fairway Independent Mortgage Lowest upfront fees on average 
Flagstar Bank Strong customer review scores
CMG Mortgage Strong customer review scores
American Pacific Mortgage Corp. Strong customer review scores
PNC Bank Low upfront fees on average 

*Average rate and fee analysis based on self-reported data lenders are required to file under the Home Mortgage Disclosure Act. Actual rates and fees will vary by customer

In this article (Skip to...)

The 8 best USDA lenders of 2023

Here’s what you need to know about each of our picks for the best USDA mortgage lenders.

Keep in mind when we use comparative terms (best, worst, highest, lowest) we’re measuring against the other USDA lenders our group of eight.

And because those eight are the best, even being the ‘worst’ in a particular category could mean a company is great compared with USDA lenders.

1. Movement Mortgage

Movement Mortgage was founded as recently as 2008. But, since then, it’s grown from a team of four to over 4,000.

Movement says “over 75% of [its] loans are processed in just 7 business days.”

This lender is particularly strong if you want to handle your mortgage process online. Of course, you’ll be assigned a loan officer who can help you every step of the way. But, if you prefer, you can move from application to closing wholly online.

Here are a few other highlights of working with Movement Mortgage:

  • Great customer ratings — Tied for highest on this list
  • Competitive USDA mortgage rates — Third lowest on average
  • Few complaints filed against it with the Consumer Financial Protection Bureau (CFPB)
  • Higher upfront loan costs — The most expensive on our list
  • Operates in all 50 states
  • Better Business Bureau (BBB) rating: A+

You’ll likely have a great customer experience. But you may have to pay a bit more for it. So compare Movement Mortgage rates with quotes from a few other lenders to make sure you get a great deal.

2. Freedom Mortgage Corp.

Founded in 1990, Freedom Mortgage Corp. is now one of America’s biggest mortgage lenders. It originated more USDA loans in 2019 than any of our other seven.

Freedom also had the lowest average USDA loan rate on our list — plus moderate loan charges.

  • Lowest average USDA rates in our survey
  • Third lowest USDA loan costs on average
  • Sixth for customer satisfaction scores
  • More customer complaints to the CFPB than most
  • Operates in all 50 states
  • BBB rating: B+

Freedom should be a shoo-in for your shortlist if you want to keep your monthly payments and loan costs low.

3. Caliber Home Loans

Caliber tends to emphasize its personal approach. If you choose this company, you can expect to work closely with a loan consultant throughout the mortgage process.

Caliber Home Loans is a strong contender in other areas, too:

  • Second-lowest average USDA rates among our eight lenders
  • Competitive USDA loan costs
  • Third-fewest customer complaints to the CFPB
  • Lowest average score for customer reviews — But all our eight were very high scoring
  • Operates in all 50 states
  • BBB rating: A

Caliber could be particularly good if you want a low rate and prefer personal interactions to working online.

4. Fairway Independent Mortgage Company

Fairway lets you choose to engage fully with a loan officer or to go mostly online through its website and app. So its offering should appeal to a wide range of borrowers.

Although Fairway’s average USDA rates were higher than others, its loan costs were the lowest of all. So it may be attractive to those with smaller savings who need to prioritize upfront charges over continuing payments.

  • Lowest upfront USDA loan costs of our group
  • Good scores from customer reviews
  • Highest average USDA loan rate in 2019
  • Operates in all states except Alaska and West Virginia
  • BBB rating: A+

Fairway can also be sympathetic to those with damaged credit. If your score is too low, it offers to have a professional credit analyst review your credit report and draw up a personalized plan to help you improve it — at zero cost to you.

This could easily make Fairway the best option for borrowers whose FICO scores are just below the USDA minimum of 640.

5. Flagstar Bank

Flagstar is one of only two full-service banks among our eight. It says it’s America’s sixth-largest bank mortgage originator and the second-largest savings bank.

One potential perk is the Flagstar Gift Program, which gives qualifying buyers up to $2,500 toward their down payment or closing costs. Such a grant can make or break homeownership dreams — even for someone putting 0% down on a USDA loan.

Remember, closing costs are 2%-5% of the loan amount, which generally comes out to a few thousand dollars. Help covering those can go a long way for many home buyers.

Other features of Flagstar Bank include:

  • Tied for best customer review scores
  • Competitive USDA mortgage rates on average
  • Low upfront USDA loan costs on average
  • $2,500 Flagstar Gift Program grant
  • Operates in all 50 states
  • BBB rating: A+

Mortgage companies tend to pull ahead of big banks in lender rankings. But Flagstar seems to be an exception.

6. CMG Mortgage

CMG was founded in 1993 and is unusual in that it’s still privately held. It seems to have maintained a cohesive, customer-focused culture while being agile and innovative.

One key feature is the company’s CMG HOME mobile app, which, it says, “guides you through your home search and mortgage financing and connects you directly to your loan officer and Realtor.” This could offer a comprehensive home buying experience all in one place.

Other things to know about CMG mortgage include:

  • Tied for best customer review scores
  • Lowest level of customer complaints to the CFPB
  • Third lowest USDA mortgage rates on average
  • Third highest upfront USDA loan costs on average
  • Operates in all 50 states
  • BBB rating: A+

More CMG customers seem happy with their lender than any others on our list. So it seems a great contender for USDA loans, especially for borrowers who want a little extra support with their loan application.

7. American Pacific Mortgage Corp.

American Pacific may be one of the least famous names on our list. But it’s a very credible lender with a pile of industry awards, and about 200 branches and 1,400 loan advisers nationwide.

American Pacific is another lender with many happy customers, which you may think is among the most important criteria when compiling your shortlist.

Other features of American Pacific include:

  • Tied for best customer review scores
  • Second-lowest level of customer complaints to the CFPB
  • Midrange for USDA mortgage rates
  • Higher upfront USDA loan costs on average
  • Operates in all 50 states
  • BBB rating: A+

Those loan costs may put you off. But you won’t know your exact closing costs or how low your USDA mortgage rate could be until you ask for a quote.

8. PNC Bank

PNC Bank is a serious player in financial services, with 8 million customers and a history going back more than 160 years.

PNC’s physical presence extends to 2,600 branches, mostly in eastern states. But it provides mortgages and USDA loans across the country through impressive online and phone services.

These include the online Home Insight Tracker, which helps process your application online as conveniently as possible.

PNC also offers qualifying borrowers a $1,500 grant to help with closing costs. So you should check to see if you’re eligible.

  • Midrange for average USDA mortgage rates
  • Second-lowest USDA loan costs — Plus the possibility of a $1,500 grant
  • High customer review scores
  • Most complaints to the CFPB — Though still less than 1 complaint per 1,000 loans
  • Operates in all 50 states
  • BBB rating: A+

If you like the idea of working with a big and well-established bank, PNC may be a good choice. Even if you don’t care about the type of institution, this is an all-around strong lender with plenty to recommend it.

How to find USDA lenders near you

To find the best USDA lenders, we started with a list of the 25 biggest mortgage lenders nationwide that clearly state they offer USDA loans. These are highly-rated lenders with a documented history of offering fair rates and good service.

But the list doesn’t stop here.

There are plenty of other good USDA lenders around — and some might even be local to your neighborhood.

Many borrowers find great deals and personalized service working with a local bank, mortgage lender, or credit union. So by all means, add local lenders to your shortlist, too.

If you’re not sure whether your preferred bank or lender offers USDA mortgages, you can call them and ask. Or you can look for USDA lenders near you on this complete list of USDA-approved lenders.

Just note, not every company that’s USDA-approved is actively making USDA loans at the moment. So you’ll need to double-check with any lender you find on the list before applying.

USDA loan benefits

If you’ve read this far, you probably already understand the benefits USDA loans can bring. But there’s no harm in running through them:

  1. No down payment — Literally 0% down is required, though you can make a down payment if you want to reduce your loan amount and monthly mortgage payments
  2. Finance closing costs — You can often roll up all the closing costs into your loan, and repay them as a small part of each monthly payment
  3. Below-market mortgage rates — On average, USDA loans come with rates that are as good or better than other mortgages. Although, required mortgage insurance will increase your annual percentage rate (APR)
  4. Affordable mortgage insurance — The cost of USDA mortgage insurance is much lower than FHA mortgage insurance premium (MIP), and often below conventional loan PMI. USDA’s upfront guarantee fee is just 1% of the loan amount and the annual fee is 0.35%, compared to 1.75% and 0.85% respectively for FHA
  5. No prepayment penalties — If you want to pay off your loan early or refinance it, you won’t be charged a penalty

Thanks to their affordable upfront cost and lenient underwriting, USDA loans are especially popular with first-time home buyers and lower-income borrowers.

But this program is open to repeat home buyers and refinancing homeowners as well.

Of course, as with all loans, you’ll likely get a better mortgage rate if you have a big down payment, high credit score and low existing debts.

But many get approved for USDA loans even with low income, no down payment, and moderate credit.

How to qualify for USDA loans

USDA loans — also known as USDA Rural Development Loans — are backed by the U.S. Department of Agriculture.

These mortgages are meant to improve low- and moderate-income housing opportunities in rural communities. As such, they’re only available for homes being bought or refinanced in eligible rural areas.

Property eligibility

USDA’s ‘rural’ requirement might sound restrictive, but in fact, most of the U.S. landmass is considered ‘rural’ by USDA’s standards. Many suburban areas are included.

You can find out if the home you want to buy is in such an area using USDA’s lookup tool.

In addition, the property being purchased or refinanced must be a single-family home. Some condos and townhomes are eligible, assuming they are within USDA’s geographic areas and are within a condo project that is approved by FHA, VA, Fannie Mae or Freddie Mac.

And the borrower must plan to use it as their primary residence. Vacation homes and investment properties are not allowed.

Borrower eligibility

Location isn’t the only requirement for a USDA loan. Eligibility is also based on the borrower’s income, credit, and current debts.

Exact requirements can vary by lender, but USDA’s minimum standards to qualify include:

  • 640 minimum credit score
  • Clean credit history showing on-time debt payments
  • 41% maximum debt-to-income ratio (DTI)
  • Steady income and employment
  • Household income at or below local USDA income limit

USDA is one of only a few major loan programs that impose income limits for borrowers.

The rule is, you must not make more than 15% above the local median income. However, that’s adjusted to take into account the number of people in the household, and especially those who are dependants.

To find out whether your income is at or below the local limit, you can use this USDA income limit lookup tool.

USDA borrowers must also be willing to finance their home with a 30-year fixed-rate mortgage. 15-year fixed-rate loans and adjustable-rate mortgages are not allowed under this program.

Alternatives to a USDA home loan

Suppose you earn too much to qualify for a USDA mortgage, or the home you want to buy isn’t in a designated area.

Don’t give up on your homeownership dream! There are other loan types you might be able to access.

If you’re eligible for a VA loan (almost exclusively for veterans and active-duty service members), that’s probably your best choice.

VA loans are the only other major home loan program with no down payment required and consistently below-market interest rates. Even better, there’s no annual mortgage insurance.

But you may have other options, none of which impose restrictions on income (beyond your being able to afford payments) or the location of the home.

In particular, check out:

  • FHA loans — You’ll need a 3.5% down payment, but credit standards are easy (580 min. credit score) and rates are competitive. Just watch out for pricey mortgage insurance premiums
  • Conforming loans — From Fannie Mae and Freddie Mac, these need only a 3.0% down payment. But you’ll need a credit score of 620 or better

Are those down payments too high for your current savings? Explore down payment assistance programs (DPA). There’s bound to be at least one program operating where you want to buy.

You might be eligible for a grant, forgivable loan, or repayable loan that could see you closing on a home purchase much sooner than you dreamed possible.

What are today’s mortgage rates?

Today’s mortgage rates, including USDA loan rates, are at historic lows.

Coupled with USDA’s zero-down-payment allowance, it’s a very affordable time to buy a home in qualified areas.

Compare USDA lenders to find the best interest rate and lowest loan costs for your situation.

Peter Warden
Authored By: Peter Warden
The Mortgage Reports Editor
Peter Warden has been writing for a decade about mortgages, personal finance, credit cards, and insurance. His work has appeared across a wide range of media. He lives in a small town with his partner of 25 years.