What Is a USDA Loan? USDA Refinancing Explained

If you’re buying or refinancing a home in a suburban or rural area, a USDA loan can be one of the most affordable mortgage options available. With 0% down, low rates, and flexible credit guidelines, USDA loans are designed to help low- to moderate-income households purchase or improve a primary residence outside major metropolitan areas.

And if you already have a USDA mortgage, you may be able to refinance into a lower payment through one of the USDA’s specialized refinance programs — some of which require no appraisal and minimal documentation, but this varies by lender.

This guide explains what a USDA loan is, who may be eligible, and how USDA refinancing works  — including the differences between the USDA Streamline, USDA Streamlined-Assist, and USDA Non-Streamlined refinance programs.

Key Takeaways

✅ USDA loans offer 0% down, competitive rates, and no PMI — but they require USDA mortgage insurance (called “guarantee fees”).

✅ USDA refinancing options include Streamline, Streamlined-Assist, and Non-Streamlined refis.

✅ Some USDA refinances require no appraisal and no DTI calculation, but the exact requirements vary based on different lender overlays.

✅ USDA loans and refinances are for primary residences only in eligible rural/suburban areas.

💡 Pro Tip: No matter the type of loan you apply for, upload your Loan Estimate to Fincast, where vetted lenders see if they can offer you a better deal. It takes the work out of shopping around yourself and helps you determine whether a better offer is available.

What Is a USDA Loan?

A USDA loan is a mortgage backed by the U.S. Department of Agriculture’s Rural Development program. It’s designed to help eligible borrowers buy, build, improve, or refinance a home in a USDA-eligible rural or suburban area.

Major USDA Advantages

• 0% down payment required

• Below-market mortgage rates

• No traditional PMI (private mortgage insurance)

• Flexible credit requirements

• Reduced out-of-pocket costs

USDA Loan Requirements (Overview)

• Property must be in a USDA-eligible area

• Borrower must meet income limits (varies by county and household size)

• Property must be a primary residence

• Minimum credit score: often 620, but can vary by lender

• Must pay USDA guarantee fees (similar to mortgage insurance)

💡 Pro Tip: USDA loans are ideal for small towns, rural communities, and many suburban neighborhoods—millions of properties qualify, and they are not always “in the middle of nowhere” like most people assume.

USDA Guarantee Fees (Mortgage Insurance)

The USDA doesn’t charge PMI, but instead charges:

• Upfront Guarantee Fee: 1% of the loan (can be financed)

• Annual Guarantee Fee: 0.35% (added to monthly payment)

These fees are often lower than FHA mortgage insurance, but are worth comparing side-by-side to ensure you have the deal that makes the most financial sense for your situation.

USDA Refinancing Options Explained

USDA offers three refinance programs for existing USDA borrowers. Each is designed to lower payments, reduce interest rates, or convert from an older USDA loan type to a current one.

1. USDA Streamline Refinance

A simplified refinance requiring:

✔ No appraisal

✔ No income documentation

✔ No employment verification

✔ Faster closings and fewer documents

This program is similar to a VA IRRRL or FHA Streamline.

Requirements

• Must already have a USDA loan

• Must have made on-time payments for the last 180 days

• Your new interest rate must be lower than the existing one

• No cash-out allowed

• Property must remain a primary residence

Best For

Borrowers who have made their payments on time and want to take advantage of lower rates.

2. USDA Streamlined-Assist Refinance

This is the most generous USDA refinance program and often the easiest to qualify for.

Key Benefits

• No appraisal in most cases

• Limited or no credit review (depends on the lender)

• Little to no income documentation

• Often no DTI calculation

• Note: While these benefits are standard USDA guidelines, individual lenders may add extra requirements, called overlays. For example, some lenders may require a specific credit score or proof of income.

Requirements

• Must already have a USDA loan

• Must have made  on-time payments for the last 12 months

• Payment must decrease by at least $50/month

• The borrower must be current on the mortgage

• The property must remain your primary residence

Best For

• Borrowers with credit challenges or higher DTI ratios

• Homeowners looking for a faster, low-document refinance

• Borrowers with changed income since the original loan

3. USDA Non-Streamlined Refinance

This is the most thorough USDA refinance option, similar to a standard conventional or FHA refi.

Requires

• Full income documentation

• Full credit review

• Appraisal required

Benefits

• Allows change to loan type or term

• May allow slightly higher LTV limits; requirements vary by lender

• Good for borrowers who need flexibility beyond the streamline programs

Best For

Homeowners who:

• Need to change borrowers on the loan

• Need to address property issues with an appraisal

Can You Get Cash-Out With a USDA Refinance?

No. The USDA does not allow cash-out refinances.

USDA refinances are strictly rate-and-term programs.

If you need a cash-out refinance, you must use:

• A conventional cash-out refinance,

• An FHA cash-out refinance, or

• A VA cash-out refinance (if eligible).

USDA Refinance Requirements (2026)

Requirements vary by program, but here are the general rules:

✔ Credit Score

• USDA does not set a minimum

• Most lenders require 620+, but it varies by lender

✔ Income Limits

The borrower must meet USDA income limits for their county.

✔ Primary Residence Only

USDA refinances are not allowed on second homes or investment properties.

✔ Loan Seasoning

• Must have 6-12 months of on-time payments, depending on the type of refinance

• Must be current at the time of refinance

✔ Appraisal Requirements

• Streamline: No

• Streamlined-Assist: No

• Non-Streamlined: Yes

✔ Closing Costs

Borrowers can:

• Pay out-of-pocket

• Roll them into the loan if the appraised value supports it

• Use lender credits

When a USDA Refinance Makes the Most Sense

A USDA refinance is smart when you:

✔ Want a lower monthly payment

✔ Want to lower your interest rate

✔ Have limited income or credit flexibility

✔ Want a no-appraisal refinance

✔ Bought when rates were higher

✔ Want a faster, easier refi with less documentation

The USDA Streamlined-Assist is particularly attractive when income or credit profiles have changed.

USDA Refinance vs FHA, VA, Conventional

USDA shines with 0% down, low rates, and no assessment requirement for streamline refis.

How Fincast Helps You Confidently Get a USDA Refinance 🚀

USDA refinance pricing varies more across lenders than most borrowers realize.

Some lenders add:

• Higher fees

• Inflated interest rates

• Extra overlays

• Unnecessary documentation

Fincast protects you by:

1️⃣ Uploading your Loan Estimate (no extra credit pull)

2️⃣ Analyzing your rate, fees, USDA guarantee fees, APR, and closing costs

3️⃣ Letting vetted lenders determine if they have a better offer

4️⃣ Helping you secure the lowest-cost USDA refinance available

💡 Pro Tip: Even a slightly lower USDA rate can save money over the life of the loan.

FAQs

1. Does USDA allow no-appraisal refinancing?

Yes — Streamline and Streamlined-Assist require no appraisal.

2. Can I refinance into a USDA loan from another loan type?

No — only USDA loans are eligible for a USDA refinance.

3. Does USDA allow cash-out?

No — USDA refinances are rate-and-term only.

4. Can closing costs be rolled into the new loan?

Yes, if the home appraises high enough.

5. What credit score do I need for a USDA refinance?

Most lenders require a 620+ score, but guidelines vary.

Bottom Line

USDA loans are one of the most affordable ways to buy or refinance a home in eligible rural and suburban areas. With 0% down, competitive rates, and multiple streamlined refinance options, USDA offers pathways that many borrowers won’t find anywhere else.

You’re in the strongest position when:

✅ You understand USDA eligibility

✅ You choose the right USDA refinance program

✅ You compare offers across lenders

✅ You upload your Loan Estimate to Fincast to compare your options

Pro Tips (Save These!)

💡 USDA Streamlined-Assist is the easiest USDA refi

📈 No appraisal needed for streamline options

📊 USDA loans are for primary residences only

⚠ Income limits apply in every county

🚀 Use Fincast to benchmark USDA refinancing offers

Action Checklist

Check your property’s USDA eligibility

Confirm your income fits USDA limits

Select Streamlined-Assist, Streamline, or Non-Streamlined

Request a Loan Estimate

Upload your Loan Estimate to Fincast

Compare competing USDA refinance offers

Close and enjoy your lower monthly payment

👉 Ready to secure competitive refinance terms?

Upload your Loan Estimate to Fincast — and let vetted lenders compete to give you the lowest-cost USDA refinance available.