USDA Loan Requirements: Find Out If You Qualify in Five Steps

Last reviewed: October 2026 · By the MortgageCompass Editorial Team · How we research

A USDA loan lets you buy a home in an eligible rural or suburban area with no down payment, backed by the U.S. Department of Agriculture. Most borrowers use the USDA Guaranteed Loan, made by approved private lenders. To qualify, the home must be your main residence in an eligible area, your household income must be at or below 115% of the local median, and you need to show you can manage the payments. There is no first-time buyer requirement and no set price cap, although your income limits how much you can borrow.

Rather than reading a long list of rules, start with the path below. It asks the same five questions a lender would, in the same order.

Check any address on the USDA property and income eligibility site, which also shows the income limit for each county and household size.

Step by step: what each question checks

Occupancy. USDA loans exist to help people live in rural communities, so the home must be your primary residence. You cannot use one for a holiday home or a rental, and the property cannot be a working farm or used mainly to earn income.

Location. “Rural” is broader than most people expect. USDA maps include many small towns and the outer edges of growing metro areas, and eligibility can change from one side of a road to the other. The map is updated from time to time, so check the exact address before you make an offer, not just the town.

Household income. This is the step that surprises buyers most. The limit, 115% of the area median income for a guaranteed loan, applies to the income of everyone in the household who is an adult, not just the people on the loan. A working adult child or a partner who is not borrowing still counts. Some deductions are allowed, for example for children, elderly household members and certain childcare costs, so a lender may calculate a lower figure than your gross total. Limits are higher for larger households and in higher-cost counties.

Credit. USDA does not publish a single minimum score, but a score of 640 or higher usually allows automated approval through USDA’s underwriting system. Below that, lenders can approve loans manually by reviewing your full history, including rent and utility payments. Recent late payments, collections or bankruptcies make approval harder. If your score needs work, see our guide to mortgages with bad credit.

Debts. The standard guideline is 29% of gross monthly income for the new housing payment and 41% for all debts combined. Higher ratios can be accepted when you have strengths such as savings, a long job history or a strong credit record.

What a USDA loan costs

USDA loans have no monthly private mortgage insurance. Instead there are two guarantee fees: an upfront fee of 1% of the loan, which can be added to the loan, and an annual fee of 0.35% of the remaining balance, paid monthly with your mortgage. Loans are 30-year fixed-rate mortgages.

Illustrative example. On a $280,000 home with no down payment, the upfront fee is about $2,800 and the annual fee starts at about $82 a month. The same buyer using an FHA loan with 3.5% down would need about $9,800 for the down payment, pay an upfront premium of about $4,700 and an annual premium of about $124 a month to start. That is why USDA is often the cheapest low down payment option for eligible buyers. You still need money for closing costs, such as the appraisal, title and lender fees, although sellers can contribute toward them. Our first-time buyer program comparison puts USDA side by side with FHA, conventional and VA loans.

Guaranteed or Direct?

There are two USDA home loan programs. The Guaranteed Loan is the common one: you apply through a USDA-approved lender, which offers market rates and handles the process like any other mortgage. The Direct Loan is made by USDA itself for low and very low income households, and can include payment assistance that reduces the effective interest rate. Direct loans have their own lower income limits, home size and price limits, and applications go through your local USDA Rural Development office, where funding and waiting times vary.

Your next three steps

1. Check the address and income limit on the USDA eligibility site, using your full household income.
2. Get preapproved with a USDA-approved lender, and compare at least two or three, because rates and fees differ. Our tool for comparing Loan Estimates shows the true cost of each offer.
3. Plan for the appraisal. The home must meet USDA property standards for safety and soundness, so ask about any obvious repairs before you make an offer.

Sources

• USDA Rural Development: Single Family Housing Guaranteed Loan Program
• USDA: Property and income eligibility

This guide is for informational purposes only and is not financial advice. MortgageCompass is not affiliated with the U.S. Department of Agriculture. Eligibility maps, income limits and fees are set by USDA and can change. Confirm eligibility with a USDA-approved lender or your local Rural Development office.