A family preparing to move to the outskirts of St. Louis reached out after hearing about loans that require no down payment. Upon checking, it turned out they were inquiring about USDA loans. While the city of St. Louis and densely populated suburbs are not eligible, there are several areas in the western outskirts of St. Louis County and Franklin County that fall within the designated eligibility zones by USDA Rural Development. According to rd.usda.gov, the income limits for 2026 are $122,800 for households of 1 to 4 people and $162,100 for households of 5 to 8 people. Households that do not exceed these limits can purchase a home with a 0% down payment.

In addition to the advantage of no down payment, USDA loans come with a few other conditions. The home being purchased must be for primary residence purposes and cannot be used for second homes or investment properties intended for rental. The condition of the home is also subject to stricter standards compared to conventional loans, so if you are looking at older properties, it is necessary to check the inspection criteria in advance. Nevertheless, it remains an attractive option for first-time homebuyers who find it difficult to come up with a down payment.

The fact that home prices in St. Louis are relatively lower compared to other major cities also influences loan choices. According to Redfin data, as of May 2026, the median sale price in St. Louis City is $250,000, while in St. Louis County, it is around $312,000. This represents increases of 5.9% and 3.6%, respectively, compared to the previous year. At this price point, it is far below the national conventional loan limit of $832,750 for 2026. Since Missouri and this area are not designated as high-cost areas by the FHFA, it means that jumbo loans are rarely a consideration.

The lower price range also makes the conditions for conventional loans more favorable. If you put down more than 20%, you can start without PMI, and even if you are already paying PMI, you can request cancellation once your equity exceeds 20%. In a market like St. Louis, where the median price hovers around $300,000, the amount needed for a 20% down payment is significantly smaller than in other major cities, making the threshold for starting with a conventional loan relatively low.

Ultimately, the options being weighed are USDA, FHA, and conventional loans.

• USDA loans offer 0% down payment in designated areas but have income restrictions, and you must first verify eligibility by address.
• FHA loans allow you to start with a 3.5% down payment if your credit score is 580 or higher, making them still very popular among first-time homebuyers.
• Conventional loans require a credit score of 680 or higher and allow you to start without PMI if you can put down more than 20%.

For first-time buyers, income may not yet be stable, so it is essential to first check whether you exceed USDA's income limits. Conversely, if you are an investor looking to generate rental income, USDA loans are difficult to utilize due to the primary residence requirement, making conventional loans a more natural approach. Within St. Louis County, there are variations in rental demand by area, so it is safer to check rental demand and vacancy rates using local real estate association data rather than making assumptions about price increases in specific areas.

If you are a family considering school districts, keep in mind that school ratings can vary significantly within St. Louis County, so be sure to check GreatSchools ratings and verify assigned schools by address. If you are moving from another state, you may find Missouri's property tax burden to be lower than your previous residence, but since tax rates differ by county, it is wise to recalculate before closing.

This article is not investment or legal advice, and it is recommended to consult with your lending institution and professionals before making any contracts or loan applications.