USDA does not use traditional PMI. Instead, Guaranteed loans charge an annual fee — currently about 0.35% of the outstanding balance — collected monthly with your payment. Ryan and Steve break out that line item so you see true PITIA before you shop.
One recurring charge — smaller than most FHA MIP — baked into your monthly housing payment.
The annual fee is calculated on the outstanding loan amount each year. Divide that figure by 12 to see the monthly piece added to principal, interest, taxes, and insurance.
You do not write a separate yearly check. Servicers collect the fee with your regular mortgage payment as part of PITIA.
Because the fee tracks the remaining balance, the monthly amount slowly shrinks as principal drops — not a fixed forever dollar figure.
USDA also charges about 1% upfront at closing (often financed). The annual fee is the ongoing piece that shows up every month.
Buyers often ask whether USDA is “free” after zero down. The annual fee is the main ongoing cost to understand.
On a $250,000 USDA loan balance at 0.35% annual:
Ryan and Steve make the annual fee visible early — so USDA vs FHA vs conventional is an honest monthly comparison, not a surprise after appraisal.
Step 1
Include principal, interest, taxes, insurance, HOA, and the monthly annual-fee slice in one payment.
Step 2
Stack USDA’s 0.35% fee against FHA MIP and conventional PMI for your credit and down payment.
Step 3
Confirm the fee still leaves room in front-end and back-end ratios for automated or manual approval.
Step 4
Discuss whether keeping USDA long-term or refinancing later to drop the fee makes sense for your goals.
Related guides to help you compare costs and move toward pre-approval.
How the upfront guarantee fee and annual fee replace traditional MI.
What $0 down means — and what cash to close still looks like.
How the annual fee factors into front-end DTI and qualifying.
Requirements, calculator, and program details.
2MG Daily
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The USDA annual fee is a recurring guarantee fee charged on Guaranteed loans — currently about 0.35% of the outstanding loan balance each year. It is collected monthly as part of your housing payment, not as a separate bill.
Take 0.35% of the current loan balance and divide by 12. As you pay down principal, the fee slowly declines with the balance. Ryan and Steve show this line item clearly on every USDA payment estimate.
Usually not while you keep the USDA loan. Unlike conventional PMI that can cancel near 20% equity, the USDA annual fee typically stays for the life of the loan. Refinancing into conventional or another program can remove it once you leave USDA.
Often yes. USDA’s ~0.35% annual fee is typically lower than FHA’s annual MIP, which is one reason USDA can win on total monthly cost when you also qualify for zero down and an eligible area.
Send Ryan & Steve your purchase price and county — we will model the 0.35% annual fee, compare USDA to FHA, and show the real monthly number before you shop.