USDA Loan Requirements — Eligibility, Income Limits & 0% Down

A USDA loan (officially the USDA Single Family Housing Guaranteed Loan Program) is a government-backed mortgage offered by approved lenders and guaranteed by the U.S. Department of Agriculture. It was created to encourage homeownership in non-urban areas by eliminating the down payment barrier.

The program guarantees up to 90% of the loan — meaning if you default, USDA repays the lender. This guarantee is what allows lenders to offer 0% down without requiring PMI (though there is a guarantee fee in its place).

USDA eligibility is based on the USDA's property eligibility map, not a subjective definition of 'rural.' Most towns under 20,000–35,000 population qualify. Many suburban areas within commuting distance of major cities also qualify — check any address at the USDA's eligibility tool at eligibility.sc.egov.usda.gov.

The property must be a primary residence (not investment or vacation home), must be a single-family dwelling, and must meet USDA's minimum property condition standards. Condos and manufactured homes may qualify under certain conditions.

USDA loans have household income limits set at 115% of the area median income (AMI). Income limits vary by county and household size — a family of 4 in a rural county may have a different limit than a family of 4 in a suburban area. Standard limits for a 1–4 person household typically range from $90,000–$130,000 in most markets.

All household income counts — not just the borrowers on the loan. If an adult family member lives in the home and earns income, it's counted even if they're not on the mortgage. Your loan officer can calculate your exact qualifying income.

The USDA has no official minimum credit score, but most lenders require 640+ for automated underwriting approval. Scores between 580–639 may qualify through manual underwriting with a strong file. DTI requirements are typically 29% housing expense ratio and 41% total DTI, with some flexibility via compensating factors.

USDA loans require the property to be your primary residence, you must be a U.S. citizen or permanent resident, and you cannot own another adequate home within commuting distance.

Instead of mortgage insurance, USDA loans charge a guarantee fee: 1% upfront (can be rolled into the loan) and 0.35% annual fee paid monthly. Compared to FHA's 1.75% upfront MIP and 0.55% annual MIP, the USDA fee structure is typically cheaper for eligible borrowers.

For buyers who qualify for both FHA and USDA, run the comparison: USDA's lower annual fee often makes it the better long-term choice, though FHA's looser property eligibility may be the deciding factor in urban or suburban markets.