Ask the expert: My lender recommended a USDA loan. Isn't that a farm loan? No, you don't have to buy a farm or milk cows to qualify for a USDA loan. In fact, this government-backed mortgage is more widely available than you might think. A USDA loan is typically issued through a private lender and guaranteed by the United States Department of Agriculture. The idea is to provide homeownership opportunities to low and moderate-income households as well as to stimulate economic growth in rural and suburban communities. The loans offer $0 down payments and competitive interest rates to first-time homebuyers. There are a number of guidelines related to credit score, income limits, and debt ratio, as well as location of the property. The USDA website includes a map where you can search areas of the country and learn whether or not they are in eligible areas. Perhaps surprisingly, eligible areas can be found in every state and are pretty widely available; the more stringent eligibility requirements are on the buyer. "Eligible applicants may build, rehabilitate, improve or relocate a dwelling in an eligible rural area," according to the USDA website. "The program provides a 90% loan note guarantee to approved lenders in order to reduce the risk of extending 100% loans to eligible rural homebuyers." The USDA provides guaranteed loans and direct loans. With guaranteed loans, an approved lender issues the loan, which is backed by the USDA, while a direct loan is what it sounds like -- it's issued directly from the USDA. A direct loan is aimed at low to very-low income households who don't have access to safe and sanitary housing; any subsidy received is paid back when title to the property transfers or the borrower is no longer living there.