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USDA loans · 7 CFR 3555.107USDA loans: the conditional commitment, the appraisal review and the fees

A USDA guaranteed loan has a step other loans do not: before closing, the lender needs Rural Development's conditional commitment. Lenders underwrite through USDA's automated system; an Accept usually means minimal documentation – the appraisal, the flood determination and the signed request for guarantee – while a Refer means manual underwriting. Rural Development reviews appraisals before issuing the conditional commitment, and an appraisal is valid for 120 days unless the agency says otherwise. The agency issues the commitment once the lender shows the loan, applicant and site are eligible; it expires 90 days after issuance (new construction can differ), and an extension is possible only when the loan cannot close for reasons beyond the lender's control. Some inspections, such as a well test, may come after the commitment but before closing. Applications are processed in the order they are complete; if funds run short in a fiscal year, loans may be limited to first-time homebuyers and veterans. The up-front guarantee fee cannot exceed 3.5% of the loan and the annual fee 0.5% of the average unpaid balance; Rural Development sets the current rates, and the lender may pass both on to the buyer. After closing, the lender requests the guarantee within 30 days.

The USDA path to closing

  1. Underwriting

    Automated system

    Accept: minimal documents (appraisal, flood determination, request for guarantee). Refer: manual underwriting.

  2. Agency review

    Appraisal checked

    Rural Development reviews appraisals before the commitment; appraisal valid 120 days.

  3. Before closing

    Conditional commitment

    Issued when eligibility is shown; expires in 90 days unless new construction.

  4. ≤ 30 days after closing

    Guarantee requested

    The lender sends the fee, certification and closing documents.

Fees (maximums in the regulation)

  1. Up-front guarantee fee

    Up to 3.5% of the loan; nonrefundable; may be passed on to the buyer.

  2. Annual fee

    Up to 0.5% of the average unpaid balance, for the life of the loan; may be passed on.

  3. Current rates

    Set and published by Rural Development.

What the TC can do

  • Build the agency's commitment into the financing and closing dates – the lender cannot close without it.
  • Ask the lender when the file goes to Rural Development and when the commitment is expected.
  • Track the 90-day expiration if closing slips.

Questions buyers ask

What is a USDA conditional commitment?

Rural Development's approval of the loan guarantee before closing, issued once the lender shows the loan, applicant and property are eligible; it expires 90 days after issuance unless new construction is involved (7 CFR 3555.107(f)).

How much is the USDA guarantee fee?

The regulation caps the up-front fee at 3.5% of the loan and the annual fee at 0.5% of the average unpaid balance; Rural Development publishes the current rates, and the lender may pass them on to the buyer.

How long is a USDA appraisal good for?

120 days, unless Rural Development provides otherwise.

Related guides

Mark the deal as USDA in ClosingCode and the checklist adds "confirm the conditional commitment" ten days before closing – with this guide linked.

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Source: 7 CFR 3555.107 (eCFR, read October 26, 2026).

General information about USDA guaranteed loans, not legal or financial advice. Current fees are set by Rural Development. ClosingCode is software; it is not a lender. This guide is not a substitute for the advice or services of an attorney.