Written and reviewed by Jack Gladden, Senior Loan Officer, NMLS #1470164
Updated · 4-minute read · How these guides are written
On this page
USDA loans in brief
- What it is
- A mortgage guaranteed by USDA Rural Development for homes in eligible rural and some suburban areas.
- Down payment
- None: USDA allows 100% financing for eligible buyers.
- Income limit
- Household income can’t exceed 115% of the area’s median income.
- Fees
- A 1% upfront guarantee fee, usually financed, and a 0.35% annual fee paid monthly.
- Who it’s for
- A home you’ll live in as your primary residence. U.S. citizens, non-citizen nationals and qualified aliens.
- Where
- Eligible areas in California, Arizona, Florida and Ohio; many towns outside the big metros qualify.
Who and where qualifies.
- The property
- In an eligible area on USDA’s map, generally rural places and smaller towns; some suburbs of larger cities qualify too.
- Your income
- Total household income, including people who won’t be on the loan, up to 115% of the area median for your household size.
- Your use
- Your primary residence: no vacation homes, rentals or working farms.
- Your status
- A U.S. citizen, U.S. non-citizen national or qualified alien.
USDA’s eligibility site checks an address and your household income. Because the map and income limits change, I check both before you make an offer.
Want me to check an address?
Send me the address, your household size and income. I’ll check the property and income eligibility and compare USDA with FHA.
What lenders look for.
| Requirement | What’s typical |
|---|---|
| Credit | Many lenders look for 640 or higher for USDA’s automated approval; lower scores may be considered with a manual review. |
| Debt-to-income | Generally up to about 41% of income, higher with strong credit or reserves. |
| The home | A modest, safe and sound single-family home; condos and some manufactured homes can qualify. |
| Fees | 1% upfront guarantee fee and a 0.35% annual fee; sellers can help with closing costs. |
Guaranteed or direct loan?
| Guaranteed loan | Direct loan | |
|---|---|---|
| Who lends | A private lender, like me through my lenders | USDA Rural Development itself |
| Income | Up to 115% of area median | Low and very low income |
| Help with payments | No | Payment assistance can lower the effective rate |
| How to apply | Through an approved lender | Through your local USDA office |
Most buyers use the guaranteed loan. If your income is low, the direct program may also be worth a look.
USDA or FHA?
| USDA | FHA | |
|---|---|---|
| Down payment | None | At least 3.5% |
| Where | Eligible rural and suburban areas only | Anywhere |
| Income limit | Yes, 115% of area median | None |
| Upfront fee | 1% | 1.75% |
| Annual fee | 0.35% | 0.50–0.55% on most loans |
| Best for | Moderate-income buyers in eligible areas | Buyers anywhere, including higher incomes |
When both fit, USDA’s lower fees usually make it cheaper. See FHA loans.
The trade-offs.
- Location limits. Many neighborhoods in large metros aren’t eligible.
- Income cap. Higher-earning households may exceed the limit, and USDA counts everyone in the household.
- Primary homes only. No rentals, second homes or working farms.
- Fees for the life of the loan. The annual fee doesn’t drop off; owners often refinance later to remove it.
How we get started.
Check eligibility
The address and your household income against USDA’s current map and limits.
Compare
USDA, FHA and conventional side by side.
Pre-approval
Then offers on eligible homes.
Appraisal and approval
The lender’s approval and USDA’s review before closing.
USDA loans, answered plainly.
What is a USDA loan and how do you qualify?
A no-down-payment mortgage for homes in eligible rural and suburban areas. You qualify with household income up to 115% of the area median, a home you’ll live in, and credit and income the lender approves. See also: USDA vs FHA loans.
Is a USDA loan 100% financing?
Yes, for eligible buyers: no down payment is required, and the 1% upfront fee can usually be financed.
What is the income limit for USDA in 2026?
It depends on the county and household size: 115% of the area median. USDA’s eligibility site shows the current limit; I’ll check it for your area. See also: USDA vs FHA loans.
How much do I need to make to buy a house with a USDA loan?
Enough to qualify, but not more than the limit: USDA generally wants the housing payment under about 29% of gross income and all debts under about 41%, while household income must stay within 115% of the area median. I’ll check both for the address. See also: USDA vs FHA loans.
Can I put 20% down on a USDA loan?
You can, but with 20% down a conventional loan is usually cheaper, because it has no mortgage insurance or guarantee fees.
Which is better, FHA or USDA?
When you qualify for both, USDA usually costs less: no down payment and lower fees. FHA works anywhere and has no income limit.
What disqualifies you for a USDA loan?
An ineligible address, household income above the limit, a home you won’t live in, or not meeting the lender’s credit and income standards. See also: USDA vs FHA loans.
Can I make a down payment on a USDA loan?
Yes. USDA requires none, but you can put money down. With a large down payment, though, a conventional loan may cost less, so compare both.
What is considered a rural area for a USDA loan?
USDA’s map decides, not the word rural. Many small towns and outer suburbs qualify; generally, areas outside larger cities, often with populations under about 35,000. I can check any address. See also: Rural & acreage loans.
Is the USDA still offering home loans?
Yes. The USDA guaranteed home loan program is ongoing. Approvals can slow if federal funding lapses, so it’s worth leaving a little extra time in your contract. See also: USDA vs FHA loans.
Can I use a USDA loan to build a home?
Yes, through USDA’s single-close construction-to-permanent option, which covers the lot, the build and the long-term loan in one closing. Fewer lenders offer it, and it needs an approved builder, a home in an eligible area and household income within the limit. See also: USDA vs FHA loans.
Rural & acreage
FHA
First-time buyers & down payment help
Manufactured homes