What Is a USDA Loan?

A USDA loan, facilitated by the United States Department of Agriculture (USDA), is a mortgage program designed to aid individuals and families in purchasing homes in rural and suburban areas. These loans cater to those with low to moderate incomes, offering a pathway to homeownership with favorable terms. Unlike traditional mortgages, USDA loans often require no down payment, making them an attractive option for buyers who may not have substantial savings. With competitive interest rates and accessible financing, USDA loans empower buyers to achieve their homeownership goals while minimizing upfront costs.

One of the notable features of USDA loans is their focus on helping individuals buy a house with low income. By providing financing options tailored to those with limited financial resources, USDA home loans in South Carolina play a crucial role in promoting homeownership and economic development in rural communities. Whether it’s purchasing a modest home in the countryside or a suburban property, USDA loans offer an opportunity for individuals and families to secure stable housing and build brighter futures for themselves and their communities.

USDA Loan Requirements in South Carolina

Borrowers must meet USDA loan requirements in SC outlined by the United States Department of Agriculture (USDA) in order to qualify for this type of financing. These requirements primarily revolve around income and location guidelines. 

Firstly, the property being purchased must be situated in designated rural areas as determined by the USDA. These areas are typically characterized by smaller populations and are identified through the USDA’s online mapping tool. While some suburban areas may also qualify, the emphasis is generally on rural regions to promote homeownership and economic development in these areas.

Secondly, income eligibility is a crucial aspect of USDA loan qualification. The program aims to assist individuals and families with low to moderate incomes. Income eligibility is determined based on the median income for the area where the property is located, as well as the number of people in the household. Generally, applicants must have an income that does not exceed 115% of the median income for the area. 

By meeting these general requirements, prospective home buyers in South Carolina can access the benefits offered by USDA loans, including the opportunity to purchase a home in rural areas with favorable terms and minimal financial barriers.

Pros and Cons of USDA Loans

Before taking out any type of mortgage, it’s important to weigh the pros and cons it comes with. Below are some of the key benefits and drawbacks to consider before applying for a USDA loan in SC. 


  • No Down Payment: One of the most significant advantages of USDA loans is that they often require no down payment. This feature makes homeownership more accessible for individuals and families in South Carolina, especially those who may not have substantial savings for a down payment.
  • Interest Rate: USDA loans typically offer competitive interest rates, which can result in lower monthly mortgage payments compared to other loan options. This can save borrowers money over the life of the loan, contributing to overall affordability.
  • No PMI Requirement: While conventional loans typically require borrowers to pay private mortgage insurance (PMI) if they put down less than 20%, USDA loans don’t require PMI.
  • USDA Streamline Refinance: South Carolina homeowners with USDA loans can easily refinance to a lower rate (if available) without an appraisal or income docs.
  • No Prepayment Penalties: Many mortgages have penalties in place for borrowers who pay off most or all of their loan well before the end of the loan term. However, USDA loans don’t have prepayment penalties, so you’re free to repay your loan early and save on interest in the long run. 
  • Promotes Rural Development: USDA loans play a vital role in promoting homeownership and economic development in rural areas of South Carolina. By offering favorable financing terms, these loans encourage individuals and families to invest in rural communities, contributing to their growth and stability.


  • Location Restrictions: Properties eligible for USDA loans must be located in designated rural areas, which may limit options for home buyers who prefer to live in urban or suburban areas of South Carolina.
  • Income Limits: USDA loans have income limits based on the area’s median income and household size. Borrowers with incomes exceeding these limits may not qualify for USDA financing, restricting eligibility for some individuals and families.
  • Guarantee fees: While USDA loans don’t mandate PMI for borrowers, they do require upfront and annual guarantee fees for all borrowers. Guarantee fees tend to be lower than PMI and serve to sustain the USDA mortgage program for other borrowers. Guarantee fees are 1% of the loan amount upfront and .35% annually.
  • Property Eligibility Criteria: Properties financed with USDA loans must meet certain eligibility criteria, including minimum property standards set by the USDA. Additionally, properties purchased with a USDA loan must serve as the borrower’s primary residence. 

Understanding the pros and cons of USDA loans can help individuals and families in South Carolina make informed decisions about their financing options and whether a USDA loan aligns with their homeownership goals and financial situation.

How to Qualify for a USDA Loan in South Carolina

To qualify for a USDA loan in South Carolina, meeting certain key eligibility criteria set by the United States Department of Agriculture (USDA) and the lender is essential. While USDA sets general guidelines, lenders may have specific requirements, particularly regarding creditworthiness and financial history. Here are some lender requirements:

  • Minimum Credit Score: While USDA does not set a minimum credit score requirement, most lenders prefer applicants to have a credit score of at least 640. At Griffin Funding, we can provide USDA loans to borrowers with FICO scores as low as 600. 
  • Debt-to-Income (DTI) Ratio: Lenders typically assess a borrower’s DTI ratio, which compares their monthly debt payments to their gross monthly income. While USDA guidelines allow for flexibility, most lenders prefer a DTI ratio of 41% or lower. Some lenders may consider higher ratios if the borrower has compensating factors, such as a higher credit score or significant cash reserves.
  • Stable Employment and Income: Lenders typically require applicants to have a stable employment history and verifiable income. Borrowers may need to provide pay stubs, W-2 forms, and tax returns to demonstrate their income stability.
  • Time Since Bankruptcy or Foreclosure: Lenders may have specific waiting periods following bankruptcy or foreclosure before a borrower is eligible for a USDA loan. Typically, borrowers must wait at least three years after a foreclosure and two to four years after a bankruptcy discharge, depending on the circumstances and the lender’s guidelines.
  • Property Eligibility: While USDA sets the criteria for eligible properties, lenders may have additional requirements regarding the condition of the property. The home must meet certain minimum property standards to ensure it is safe and habitable.

By understanding and meeting these lender requirements, potential home buyers in South Carolina can improve their chances of qualifying for a USDA loan and achieving their dream of homeownership in rural and suburban areas. Working closely with a knowledgeable lender, such as Griffin Funding, can help navigate the application process and ensure all requirements are met for a successful loan approval.

Apply for a USDA Home Loan in South Carolina

If you’re looking to apply for a USDA home loan in South Carolina, Griffin Funding is here to help. With our expertise and personalized service, we’ll guide you through the application process, ensuring you meet all eligibility requirements and secure the financing you need for your dream home. 

Plus, with the Griffin Gold app, managing your loan has never been easier. Track your progress, communicate with your loan officer, and stay informed every step of the way as you work to secure a USDA home loan in SC. 

Don’t let the lack of a down payment hold you back from homeownership. Contact Griffin Funding today to learn more about USDA loans in South Carolina or fill out an application to get started right away.