USDA Interest Rates Today: Direct 5.125%, Guaranteed, and Section 504

USDA interest rates today sit at 5.125% for Single Family Housing Direct loans, a flat 1% for Section 504 home repair loans, and a market-negotiated rate for Guaranteed loans that typically runs below conventional mortgages. The Direct loan rate is fixed for the life of the loan and updates on the first day of each month. Payment assistance can lower the effective Direct rate to as little as 1% for the lowest-income borrowers.

Direct Loan Rate: 5.125%

The Single Family Housing Direct Home Loan program is the only USDA housing program where the government itself lends the money and posts the rate. As of June 1, 2026, that rate is 5.125% for both low-income and very low-income borrowers.¹ It’s fixed for the life of the loan. The USDA resets it on the first of every month based on the government’s current cost of borrowing from the Treasury.

The standard term is 33 years. Very low-income applicants, meaning households at or below 60% of area median income, can qualify for a 38-year term if the longer payoff is needed to make payments affordable. Manufactured homes cap out at 30 years.²

Payment Assistance Can Drop the Effective Rate to 1%

The posted 5.125% isn’t necessarily what a Direct borrower pays month to month. Payment assistance is a subsidy that temporarily reduces the effective interest rate based on adjusted household income, and for the lowest-income borrowers it can bring the effective rate all the way down to 1%.¹ The amount is recalculated periodically, so as income rises or falls, the effective rate shifts with it.

One thing worth knowing before you count on that 1%: the subsidy isn’t forgiven. When you sell, move out, or pay off the loan, USDA requires repayment of some or all of the payment assistance you received. The maximum recapture is the lesser of 50% of the home’s appreciation or the total subsidy paid over the life of the loan. If you pay the mortgage off but keep living in the home, recapture can be deferred until you sell or move. Borrowers who settle the recapture at payoff get a 25% discount.³

Guaranteed Loan Rates: Set by Your Lender

The Single Family Housing Guaranteed Loan Program runs through private lenders, not USDA. Your interest rate is negotiated between you and the lender.⁴ Because USDA guarantees 90% of the loan amount, lenders take on less risk and the rates they offer tend to run below conventional mortgage rates.⁵

USDA does dictate some non-negotiable terms. The rate has to be fixed, locked before settlement, and attached to a term of at least 30 years. Adjustable-rate mortgages, balloon payments, negative amortization, and prepayment penalties are all prohibited.⁴ What you actually get quoted depends on the same forces that move every mortgage rate: Treasury yields, Fed policy, and investor demand for mortgage-backed securities. Shop at least three approved lenders on the same day, since rates move daily.

Guarantee Fees Add to Your True Cost

Guaranteed loans don’t come with a government-set rate, but they do come with government-set fees. In 2026, the upfront guarantee fee is 1% of the loan amount and the annual fee is 0.35% of the remaining balance, paid monthly with your mortgage.⁴ The upfront fee can be rolled into the loan. Both fees are set each fiscal year (October through September) and can change.

On a $200,000 loan, the upfront fee adds $2,000 to the balance and the annual fee starts around $700 per year, or about $58 a month. The annual fee shrinks as principal drops. When you’re comparing a USDA rate quote to other loan products, add these fees into the math.

Section 504 Repair Loan Rate: 1%

The Section 504 program carries a fixed interest rate of 1% for the full 20-year repayment term.⁶ This 1% is by statute, not subsidy, so it applies to every qualifying borrower. The program is built for very low-income homeowners who need to repair, modernize, or remove health and safety hazards from their homes.

The maximum loan amount is $40,000. Homeowners 62 or older who cannot afford to repay a loan may qualify for a grant of up to $10,000 instead, or up to $15,000 if the home sits in a presidentially declared disaster area. Loans and grants can be combined for up to $50,000 in total assistance, or $55,000 in disaster areas.⁶ Grants don’t have to be repaid, but they can only be used to address safety hazards, not general upgrades.

Who Actually Qualifies for These Rates

The rate you’re eligible for depends on which program fits your income and where you’re buying. Direct loans require adjusted household income within the low-income or very low-income thresholds for your county, and household income counts earnings from every adult in the home, not just the people on the loan.⁷ Direct applicants also generally have to show they can’t obtain credit from other sources. Guaranteed loans allow income up to 115% of area median income.⁸ In most parts of the country that works out to $119,850 for a household of one to four and $158,250 for five to eight, with higher ceilings in high-cost areas.

Credit affects whether a lender will actually give you a competitive rate. The Guaranteed program has no official minimum credit score,⁵ but in practice 640 is the threshold for automated underwriting. Below that, the file goes to manual underwriting, which is slower and more paper-heavy, and many lenders won’t take it on. Some lenders set overlays 20 to 40 points above 640.

One boundary to know: every USDA housing program requires the property to sit in a designated rural area, which the USDA defines more broadly than most people expect but still excludes most cities and suburbs. Investment properties and vacation homes are not eligible.

How USDA Rates Compare to Conventional and FHA

The rate itself isn’t always where USDA wins. What tilts the math is the combination of a competitive rate with zero down payment. Guaranteed loans finance 100% of the purchase price.⁵ Conventional loans typically want 3% to 20% down. FHA requires at least 3.5%.

USDA’s 0.35% annual guarantee fee also runs below FHA’s ongoing mortgage insurance premium, which is 0.55% or higher for most borrowers. Conventional loans with less than 20% down carry private mortgage insurance that varies with credit score and can exceed 1% annually. A USDA loan at a slightly higher headline rate can still produce a lower monthly payment once the down payment and insurance costs are folded in.

Where to Check the Current Rate

For Direct loans, the current rate is posted on the Single Family Housing Direct Home Loans page at rd.usda.gov and refreshes on the first of each month.¹ The Section 504 repair rate doesn’t move; it stays at 1% regardless of market conditions.⁶

For Guaranteed loans, no single USDA rate table exists because every lender prices its own loans. Pull quotes from at least three USDA-approved lenders on the same day. You can find approved lenders through your local Rural Development office or the rd.usda.gov site. Requests for loan note guarantees are currently being processed within about 10 business days, but how fast you get to closing depends mostly on how quickly your lender moves the file.

1
USDA Rural Development. Single Family Housing Direct Home Loans
2
USDA Rural Development. Section 502 Direct Loan Program Overview
3
USDA Rural Development. Subsidy Recapture for Single Family Housing Direct Loans
4
USDA Rural Development. USDA Single Family Housing Guaranteed Loan Program Overview
5
USDA Rural Development. Single Family Housing Guaranteed Loan Program
6
USDA Rural Development. Single Family Housing Repair Loans and Grants
7
USDA Rural Development. Annual Income – Removing the Mystery
8
Federal Deposit Insurance Corporation. Single Family Housing Guaranteed Loan Program