Monthly payment for a USDA Section 502 Guaranteed loan, with FY2027 fees and the income ratios
Updated October 2026
The Section 502 Guaranteed program backs loans made by approved lenders to low- and moderate-income households buying a home in an eligible rural area. Under 7 CFR 3555, the household’s adjusted income cannot exceed the moderate income limit for the area (115% of median income, with other tests), the home must be the borrower’s principal residence and "modest, decent, safe, and sanitary", and the loan must be a fixed-rate loan of no more than 30 years. USDA’s online eligibility site shows the income limit for your county and household size and whether an address is in an eligible area; limits differ widely by county, so check there rather than relying on a single national number.
Enter the price (or appraised value), any down payment (none is required), whether the 1% upfront fee is financed or paid in cash, your rate, and yearly property taxes and insurance. Add gross monthly household income and other monthly debts to see the ratios lenders check. Results show the loan amount, principal and interest, the annual fee, the full monthly payment, cash needed and the two ratios.
Upfront fee: $250,000 × 1.00% = $2,500. Financed, the loan becomes $252,500, which 7 CFR 3555.103 allows because the loan may equal the appraised value plus the upfront fee. Principal and interest: $252,500 over 360 months at 7.40% = $1,748.26. Annual fee: 0.35% a year, paid monthly. Lender quotes often show $252,500 × 0.35% ÷ 12 = $73.65; the USDA handbook bases it on the average scheduled balance for the year, which makes year one $73.33 and the fee shrink as the loan is paid down. Taxes and insurance: $4,000 ÷ 12 = $333.33. Total: $2,154.93 a month.
| Case | Loan | Principal and interest | Annual fee or MIP (month 1) | Total monthly | Cash for down payment and fee |
|---|---|---|---|---|---|
| $250,000 home, 0% down, fee financed | $252,500 | $1,748.26 | $73.33 | $2,154.93 | $0 |
| Same home, fee paid in cash | $250,000 | $1,730.95 | $72.61 | $2,136.89 | $2,500 |
| $325,000 home, family income $8,000 a month | $328,250 | $2,272.74 | $95.33 | $2,701.40 | $0 |
| $250,000 home at 6.5% | $252,500 | $1,595.97 | $73.27 | $2,002.58 | $0 |
| FHA instead: 3.5% down, 1.75% upfront MIP financed, 0.55% annual MIP | $245,472 | $1,699.60 | $110.57 | $2,143.50 | $8,750 |
The FHA line uses HUD’s current premiums (1.75% upfront, 0.55% a year for a 30-year loan with less than 5% down) and a first-year approximation of the monthly premium. FHA needs $8,750 down on this home; the USDA loan needs none, and its annual fee is lower, but USDA limits where you can buy and how much your household can earn.
For loans closed from October 1, 2026 through September 30, 2027, USDA Rural Development set the upfront guarantee fee at 1.00% and the annual fee at 0.35% for both purchases and refinances (lender bulletin, September 16, 2026). The regulation caps them at 3.5% and 0.5%, and USDA can change them by notice. The annual fee applies for the life of the loan. For underwriting, USDA’s guide ratios are 29% of repayment income for the housing payment (principal, interest, taxes, insurance and the annual fee) and 41% for total debt; the regulation allows higher ratios when compensating factors exist (7 CFR 3555.151).
The home must be in an eligible area, meet USDA’s property standards and be your primary residence; it cannot be an investment property. USDA also runs a separate Direct Section 502 program for lower-income households, with the agency as lender and possible payment assistance; this calculator models the Guaranteed program only. Closing costs can be paid by the seller, financed only to the extent the appraisal exceeds the price, or paid in cash; the regulation does not let you finance seller-paid costs.
Assuming "rural" means farmland: many small towns and suburbs qualify; check the address. Counting only your own income: the income limit uses the whole household’s adjusted income, even members not on the loan. Forgetting the annual fee in the budget. Planning to rent the home out: the loan is for an owner-occupied primary residence. Expecting an ARM or a 15-year option to cut costs: the guaranteed program requires a fixed rate and allows terms up to 30 years.
It does not check your county income limit or the property map, adjust income for USDA’s deductions (such as for dependents and child care), price your actual interest rate, or include HOA dues and other closing costs. A USDA-approved lender confirms eligibility and the exact fee schedule at closing; a HUD-approved housing counselor can help compare USDA, FHA and conventional options for free.