Many government-backed loan products promote homeownership among as many Americans as possible — including low- to moderate-income home buyers. The U.S. Department of Agriculture (USDA) backs zero-down payment mortgages for eligible home buyers purchasing properties in rural areas.
Some USDA loan programs also cover home construction or affordable housing. However, this guide will focus on the Single Family Housing Guaranteed Loan Program, which aims to support home buyers purchasing single-family homes.
At a glance: USDA loan requirements (2022)
- Status: U.S. citizen or permanent resident
- Credit score: 640+
- Income: ≤115% of the area median income
- Debt-to-income ratio (DTI): 41%
- Occupancy: primary residence must be in a USDA-eligible zone
Learn more about USDA loan qualifications and eligibility.
Although the USDA sets state lending guidelines, many USDA-approved lenders will have their own requirements, known as lender overlays.
How USDA loans work
USDA loans, often known as rural development home loans, are 100% financed, 30-year fixed-rate mortgages designed for low- to moderate-income home purchasers.
The USDA doesn't typically lend money to home buyers directly, but rather offers approved lenders default insurance as an incentive to lend money to home buyers who don't qualify for a conventional mortgage.
Interest rates on USDA loans can be slightly lower than conventional loans because they present less risk for the lender since the U.S. government backs them. However, if you’ve got a lower credit score, your interest rate could be higher if you are perceived as a higher credit risk.
What does 'rural' mean?
Up to 97% of U.S. land is eligible for USDA home loans, with many located just outside suburban areas.
Is a USDA loan right for you?
USDA loans can be a great way to jump-start your path to homeownership, but it’s not the best loan product for every situation — even if you do meet all the requirements.
If you're a "prime borrower" (e.g., you can make a larger down payment, have a higher credit score, or have a lower DTI ratio) you'd likely get a less expensive loan product with a conventional mortgage.
✅ USDA loans are ideal for borrowers who:
❌ USDA loans are not ideal for borrowers who can qualify for:
Might not otherwise qualify for a conventional mortgage loan
A conventional mortgage, which may offer better terms that reduce the total cost of the mortgage
Can afford an additional up-front guarantee fee (1%)
A lower-cost loan because of good financial health
If you're a subprime borrower but still don't qualify for a USDA loan, taking steps to improve your financial data could be worthwhile — and help you become a homeowner sooner than later.
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USDA loan qualifications and eligibility: In-depth breakdown
USDA mortgages include income restrictions, and the home must be situated in a specified rural area. Even if you don’t quite meet all the loan requirements, you may still qualify with the help of a co-signer or co-borrower.
Loan requirements 👇
There are no down payment requirements for USDA-backed loans. However, if your property appraises for less than your approved loan amount, you may have to come out of pocket for the difference. This amount would be included in your loan closing costs.
Generally, USDA-approved lenders want you to have a credit score of 640 or more. However, each lender has its own requirements for USDA loans, so you could still be approved with a higher or lower credit score.
Your gross monthly income must be equal to or less than 115% of the area median income for the county you'll be living in. You'll need to show proof of a 24-month work history or dependable income.
No more than 41% of your gross monthly income can go toward debt payments, such as mortgage or car loan. So if you earn $1,000 per month, your total debts (including your housing expenses) can't exceed $410.
USDA-backed loans are only for homes in targeted zones, which can be rural or suburban areas. Enter the address of the property you’re considering on the USDA map to make sure it’s in an eligible area.
Note: American Samoa, Guam, Northern Mariana Islands, and Puerto Rico are USDA-eligible zones. Washington, DC, is not eligible.
The property must be a single-family home (including townhouse, condo, detached unit, or manufactured). You must also be buying your primary residence — not an investment or house-flipping project.
Loan limits (2022)
Most USDA-eligible counties cap the amount they'll lend at $336,500 — though some will lend as much as $776,600. You can purchase a home that exceeds these loan amounts, but you'd have to cover the difference yourself.
- Current government-issued ID
- Credit report and score
- Proof of a Social Security number
- Pay stubs (past 30–90 days)
- Income tax returns (past 2 years)
- W-2s, 1099s, or any other proof of income (past 2 years)
- Bank statements (past 60 days)
- A letter explaining any large deposits in your bank accounts or gift funds that may be used in the transaction
As you create your budget, know that your USDA loan comes with two fees:
- Up-front guarantee fee (1% of initial loan amount), which is typically paid in full at closing and operates much like a mortgage insurance premium or private mortgage insurance
- Annual fee (.035% of current loan amount), which is typically built into your monthly payments
On a $330,000 mortgage, you'd pay a guaranteed fee of $3,000 right away and an annual fee of $115.50 for the first year of your loan.
Use our USDA loan calculator to determine your guarantee fee based on your loan amount.
Next steps: Applying for a USDA loan
Reach out to a USDA-approved lender to start your application for the Single Family Housing Guaranteed Loan Program. Ideally, you'll have already found an eligible property you like and started gathering the required documentation needed to underwrite your loan.
A local real estate agent can connect you with a knowledgeable, trusted loan officer or mortgage broker who's familiar with the requirements for the loan you’re considering.