USDA Loan Requirements

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USDA Loan Requirements

The USDA home loan is a fantastic way to purchase a home with no money down.  This loan program is insured by the United States Department of Agriculture.  The rural loan is quickly becoming the most popular home loan in 2010 now that FHA has begun to increase their requirements such as credit score, down payment, mortgage insurance, and qualifying ratios.

In order to qualify for the USDA rural housing loan, a borrower must meet the following USDA loan requirements.

Income Eligibility:

  • Total Household Income - There are two tiers (income ranges from on average from 70K to 110K per year)
    1. Household of 1-4 will equal the current 4 person limit for the property's county.
    2. Household of 5-8 will equal the current 8+ person limit for the property's county.

Property Eligibility:

  • The property must be located in an approved area designated by the USDA.  Eligibility for counties, cities, and towns are determined by population.  Originally, the USDA loan program was created for farmers.  Today, it is open to all residential properties that are deemed rural property by the USDA.  Most metro areas do not qualify but approximately 80% of the nation does qualify.
  • New or proposed home construction:  Must meet FHA appraisal standards
  • Manufactured Homes:  Only allowed if the manufactured home is brand new, double wide, and purchased from an Agency approved dealer.
  • Modular Home:  No restrictions
  • Condo and Town Home:  Must meet the requirements of Fannie Mae, Freddie Mac, or FHA.

Credit Scores:

  • 620 minimum middle credit score (scores are likely to increase to 640-660 soon)
  • Must have at least 2 credit scores

Other Requirements:

  • Must be a primary residence
  • May not have other financed properties
  • Co-signors not allowed if the co-signor will not be living the subject property
  • No non-essential buildings and land.  The property must be considered residential
  • Housing ratios and debt-to-income rations:  31/43 

Check out USDA loan eligibility for exact income figures and property maps for your area!


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Karen Staha
Gaston & Sheehan Realty - Round Rock, TX
CRS, GRI, ABR, REALTOR, Austin & Surrounding Areas Texas

Hi Justin,  Very informational post your wrote on USDA.   I just received an offer today on a buyer going USDA.  You're right, it's a great program for the right buyer in the right place.  I think we'll start seeing more USDA.

Mar 06, 2010 02:22 PM #1
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Justin Messer

Residential Loan Officer, USDA Rural Housing Loan
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