USDA home loans offer one of the most affordable paths to homeownership — with zero down payment, competitive rates, and flexible credit options. But not everyone qualifies.
In this guide, we break down the full set of USDA loan requirements, including income limits, property eligibility, citizenship guidelines, and credit standards. Whether you’re a first-time buyer or just curious about your options, you’ll find everything you need to know to determine if a USDA loan is right for you.
Income Requirements for USDA Loans
USDA loans are intended for moderate- to low-income households. To qualify, your total household income must fall below 115% of the area median income (AMI) for your location.
Important Notes:
- USDA counts all income in the household, even from individuals not on the loan.
- Income limits vary by county and household size.
- You can deduct allowable expenses (childcare, medical costs, dependent allowances) from household income to help qualify.
Check your local income limits using the official USDA income eligibility tool.
Property Eligibility Requirements
To qualify for a USDA loan, the home must be located in a USDA-eligible rural area. But “rural” may not mean what you think — many small towns and suburban neighborhoods qualify.
The property must:
- Be a single-family primary residence
- Be located in an eligible area
- Meet USDA minimum property standards for safety and livability
Multi-unit, investment, or vacation homes are not eligible.
Credit and Debt Guidelines
There is no official minimum credit score for USDA loans, but most lenders look for a score of 640 or higher for streamlined approval.
Typical underwriting guidelines include:
- DTI (Debt-to-Income) ratios of 29% (housing) and 41% (total monthly debt)
- Stable income and employment
- Clean recent credit history (late payments, collections may require explanation)
If your credit score is lower or your situation is unique, manual underwriting may still be an option.
Citizenship and Legal Residency
To be eligible for a USDA loan, you must be:
- A U.S. citizen, U.S. non-citizen national, or a qualified alien with legal residency status
You’ll need to provide documentation of your status when applying.
Occupancy and Loan Use
USDA loans are for primary residences only. You must plan to live in the home you purchase.
Other rules:
- No rental or investment properties
- Loan funds can be used for purchase, repair, or refinance (if already USDA-backed)
- Home must meet size and use restrictions — no income-producing properties or luxury features
Types of USDA Loans
There are two types of USDA loans:
| Loan Type | Best For | Overview |
|---|---|---|
| Guaranteed Loan | Most buyers | Backed by USDA, issued by approved lenders. Ideal for buyers with decent credit. |
| Direct Loan | Very low income | Funded directly by USDA. Stricter requirements and limited availability. |
💡 Did you know? The USDA Guaranteed Loan Program includes an upfront and annual guarantee fee, which helps fund the program and allows for 100% financing. These fees are similar to FHA’s mortgage insurance, but typically lower in cost. You can learn more about USDA guarantee fees and income limits in our detailed breakdown.
How to Check If You Qualify
To see if you’re eligible:
- Use the USDA Property Map to verify your home location
- Use the Income Eligibility Tool to check income limits
- Review your credit, DTI, and employment stability
- Work with a USDA-approved lender or use a tool like Loan Compass to assess which loan types fit your financial profile
USDA Loan Requirements FAQ
What are the income limits for USDA loans?
Income limits depend on your household size and county, but must be below 115% of the area median income. Use the USDA income tool to check limits for your area.
Does my home need to be in a rural area to qualify for a USDA loan?
Yes, but “rural” includes many suburban and outlying areas. Use the USDA property map to see if your home qualifies.
Can I qualify for a USDA loan with bad credit?
Possibly. While most lenders prefer a credit score of 640+, USDA allows manual underwriting for lower scores with compensating factors like stable income or savings.
Do USDA loans require a down payment?
No. USDA loans offer 100% financing — meaning no down payment is required for eligible buyers.
What types of homes qualify for USDA financing?
Homes must be single-family, primary residences located in eligible areas. Manufactured homes can qualify if they meet USDA standards and are on a permanent foundation.
Can self-employed borrowers get a USDA loan?
Yes, but you’ll need to show at least 2 years of income history and tax returns. USDA lenders will average your net income and may add back certain expenses.
Final Thoughts
USDA loans can be a powerful tool for buyers in rural or suburban areas who meet the income and property requirements. With no down payment and flexible credit guidelines, they open the door to homeownership for many who may not qualify elsewhere.
Before applying, review your income, debts, and property eligibility. And if you’re not sure whether USDA is right for you, Loan Compass can help you compare FHA, VA, Conventional, and USDA loan options — all based on your real financial profile.
