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USDA Guarantee Fee Calculator
The guarantee fee is USDA’s mortgage insurance — and it is cheaper than FHA’s. It has two parts: 1% upfront and 0.35% a year on your balance. This tool shows the fee on any loan size and answers the common question: is financing the upfront fee worth it, or should you pay it in cash?
FY2027 fee schedule (1% upfront, 0.35% annual, 1 Oct 2026 – 30 Sep 2027), checked against USDA Rural Development program terms, November 2026. Last updated 13 November 2026. Estimates only — not a lender, and not affiliated with the U.S. Department of Agriculture.
Calculate the USDA guarantee fee
| Finance the fee | Pay fee in cash | |
|---|---|---|
| Loan amount | $0 | $0 |
| Monthly principal & interest | $0 | $0 |
| Cash due at closing (fee) | $0 | $0 |
| Extra interest from financing | — | |
Year-by-year annual fee — it falls as your balance falls
| Year | Annual fee paid | Average monthly fee | Balance at year end |
|---|
The 0.35% annual fee is charged on your remaining balance, so the dollar amount shrinks every year — but it never cancels while the USDA loan is outstanding. Only refinancing into a conventional loan removes it.
Financing costs a little extra interest but keeps cash in your pocket for moving, furniture and reserves — which is why most USDA buyers finance it. See the fee inside a full payment in the main calculator, or stack USDA against FHA in the comparison tool.
How the USDA Guarantee Fee Works
- Upfront fee — 1% of the loan amount, charged once. It is normally added to the loan (financed), so a $300,000 loan becomes $303,000. Paying it in cash at closing keeps the loan — and the monthly payment — smaller.
- Annual fee — 0.35% of the outstanding balance, charged monthly. Because it follows the balance, the dollar amount falls every year. On a $303,000 loan at the start it is about $88.38 a month in year one.
- For the life of the loan. Unlike some FHA insurance, the USDA annual fee never cancels while the USDA loan is outstanding. Refinancing into a conventional loan is the only way to remove it.
- Cheaper than FHA. FHA charges 1.75% upfront and 0.55% a year — on the same $300,000 loan that is $5,250 upfront and about $137 a month in year one, against USDA’s $3,000 and about $88.
- Lifetime cost. The totals above add the 1% upfront fee to every year of the annual fee, and the year-by-year table shows the annual fee shrinking as the balance falls — from about $88 a month in year one on a $300,000 loan to only a few dollars a month by year 30. The comparison line under the tables shows the same loan under FHA’s fee schedule.
Sources. USDA Rural Development guarantee fee schedule — FY2027 (1% upfront, 0.35% annual, 1 Oct 2026 – 30 Sep 2027) — and HUD FHA mortgage insurance schedule (1.75% upfront, 0.55% annual; Mortgagee Letter 2023-05), checked November 2026. The default rate is the Optimal Blue USDA 30-year average of 7.02% (12 Nov 2026).
Sources
Official sources for the figures on this page. If a number here ever disagrees with one of these pages, the official source is correct.
- USDA Rural Development — Single Family Housing Guaranteed Loan Program (program rules, guarantee fees, income limits).
- USDA Income and Property Eligibility Site — the official eligibility map: enter an address to check the property, and a state and county to check income limits.
- USDA income limits tool — look up the income limit for your state and county (cited in HB-1-3555, Chapter 9).
- USDA Handbook HB-1-3555 — the Single Family Housing Guaranteed Loan Program handbook for lenders (PDF).
- 7 CFR 3555.107 — guarantee fee — the regulation behind the upfront and annual fees.
- Consumer Financial Protection Bureau — How to review your Loan Estimate.
Frequently Asked Questions
Is the USDA guarantee fee the same as PMI?
No. USDA loans never carry private mortgage insurance. The guarantee fee — 1% upfront plus 0.35% a year — replaces PMI entirely, and it is usually cheaper than PMI on a conventional loan or FHA’s 0.55% annual mortgage insurance premium.
Can I pay the upfront fee in cash instead of financing it?
Yes. Paying $3,000 in cash on a $300,000 loan keeps the loan smaller and saves interest over the term — the table above shows the difference. Most buyers still finance it, to keep cash free for moving, furniture and reserves.
Does the annual fee go down over time?
Yes, in dollars: the 0.35% annual fee is charged on your remaining balance, so the monthly amount shrinks every year as you pay the loan down. It never cancels while the USDA loan is outstanding — only a refinance into a conventional loan removes it.
More USDA Loan Tools
One topic, six tools — each answering a different question in the USDA loan journey.