A USDA Loan is made available by the U.S. Department of Agriculture and has no down payment requirements, no prepayment penalties, and finance closing costs go straight into the loan. Additionally, the more flexible credit limits allow for lower fixed interest rates.
Of course, the USDA loan program has geographical restrictions (you must live in a rural area AND meet all the geographical requirements).There are also certain income and housing limits. Borrowers will also have to pay for Private Mortgage Insurance (PMI).