Last year, the United States Department of Agriculture (USDA) lowered upfront and monthly fees for its home loan program. This mortgage type is extremely popular with first-time homebuyers as it offers 100 percent financing and requires zero-down payment. It also comes with cheaper monthly mortgage insurance fees than do FHA loans and applicants with credits scores down to 640 are eligible.

“The USDA fee reduction announcement is in stark contrast to the agency’s history of increasing...