The basic requirements for a USDA loan
USDA loans require three things: a property in a USDA-may be able to access rural area, a household income below the area's limit, and a credit score of at least 580 (though 640 or higher makes approval much more likely). You must be a U.S. citizen or permanent resident, have a valid Social Security number, and demonstrate the ability to repay the loan. The USDA does not set a minimum down payment — you can borrow up to 100 percent of the property's value.
The income limit depends on where the property is located and your household size. A family of four in one county might have a limit of $90,000 while the same family in another county has a limit of $110,000. You can find your area's specific limit on the USDA's website by entering the county name, or by asking a USDA-approved lender directly.
Unlike FHA or conventional loans, USDA loans do not require you to have saved a down payment. This is the main reason people choose them — the barrier to entry is lower. However, you will still pay a funding fee (usually 1 to 3.6 percent of the loan amount) and mortgage insurance, which protects the lender if you stop paying.
Key Takeaways
- Your household income must fall below your county's USDA limit, which varies by location and family size.
- The property must be in a USDA-designated rural area; you can check the map on the USDA website or ask your lender.
- A credit score of 580 is the minimum, but scores of 640 or higher have much better approval odds.
- You need to be a U.S. citizen or permanent resident with a valid Social Security number and proof you can repay the loan.
- No down payment is required, but you will pay a funding fee and mortgage insurance as part of the loan.
Income limits and how they are calculated
The USDA sets income limits by county and updates them annually. The limit for a family of four in rural areas is typically 115 percent of the area's median household income. This means if the median income in your county is $70,000, the limit for a family of four might be around $80,500 — but this varies significantly by location.
When the USDA counts your income, they include wages, self-employment income, Social Security, disability payments, child support, and rental income. They do not count one-time payments like tax refunds or insurance settlements. If you are self-employed, you will need to provide two years of tax returns so the USDA can average your income.
The income limit is based on your household size, not the number of people on the loan. If you have adult children living with you or elderly parents you support, they count toward your household size — which can raise your income limit. Be honest about who lives in the home, because the USDA will verify this.
Property location and the rural area requirement
The property must sit in a USDA-may be able to access rural area. This does not mean the property has to be a farm or have acreage — it means the location is outside a city's urban boundary. Some suburbs may have access to; others do not. The USDA maintains a map on its website where you can enter an address and see immediately whether it is may be able to access.
If you are unsure whether a specific property qualifies, do not rely on the seller or real estate agent. Use the USDA's online map tool yourself, or ask a USDA-approved lender to check. Lenders can also run the address through the system before you make an offer, so you do not waste time on a property that will not work.
Rural area boundaries change over time as counties grow. A property that was may be able to access five years ago might no longer be, or vice versa. Always verify the current status before you commit to buying.
Credit score and debt-to-income ratio
The USDA's minimum credit score is 580, but most lenders will not approve you at that score. In practice, lenders typically want to see 640 or higher. If your score is below 640, you will have a harder time finding a lender willing to work with you, and you may face a higher interest rate.
Beyond the credit score, the USDA looks at your debt-to-income ratio — the percentage of your monthly income that goes to debt payments. The USDA allows up to 50 percent of your gross monthly income to go toward all debts, including the new mortgage. Some lenders are stricter and cap it at 43 percent. If you have high credit card balances or car loans, paying them down before you apply will improve your chances.
The USDA will pull your credit report and review your payment history. Late payments, collections, or a recent bankruptcy will not automatically disqualify you, but they will make approval harder. If you have had credit problems, be prepared to explain them to the lender.
Citizenship and Social Security requirements
You must be a U.S. citizen or a permanent resident (green card holder) to get a USDA loan. The USDA will verify your status through the Department of Homeland Security. If you are a permanent resident, you will need to provide your green card or I-551 document.
You also need a valid Social Security number. The USDA uses this to pull your credit report and verify your income through the IRS. If you do not have a Social Security number, you cannot get a USDA loan.
If you are married and only one spouse is a citizen or permanent resident, only that spouse can be on the loan. The non-citizen spouse can still live in the home, but they cannot be a borrower.
Debt, savings, and repayment ability
The USDA wants to see that you have the income to repay the loan. This means your monthly income (after taxes) must be enough to cover the mortgage payment, property taxes, insurance, homeowners association fees if any, and all other debts. The lender will calculate this as your debt-to-income ratio.
You do not need to have savings in the bank, and the USDA does not require you to show reserves after closing. However, if you have very little savings and a tight monthly budget, the lender may be concerned about your ability to handle unexpected costs like a roof repair or a medical emergency.
If you have been unemployed or had a major income drop in the past two years, the lender will want to understand why and whether your income is now stable. A letter from your employer confirming your current position and income can help.
Property condition and appraisal standards
The USDA requires the property to meet minimum safety and livability standards. It must have a safe roof, working plumbing and electrical systems, and adequate heating. The property cannot have significant structural damage or health hazards like mold or lead paint.
The USDA will order an appraisal, and the appraiser will inspect the home to confirm it meets these standards. If the home fails inspection, you will need to negotiate repairs with the seller before the loan can close. In some cases, the seller will not agree to repairs, and the deal falls through.
The appraisal also determines the home's value. If the appraised value is lower than the purchase price, you cannot borrow more than the appraised value. This can be a problem if you were counting on a 100 percent loan-to-value ratio.
Frequently Asked Questions
Can I get a USDA loan if I have had a foreclosure or bankruptcy?
Yes, but there are waiting periods. After a foreclosure, you typically need to wait three years. After a Chapter 7 bankruptcy, you need to wait three years from the discharge date. After a Chapter 13 bankruptcy, you can sometimes apply while still in the repayment plan if you have made all payments on time. Ask a USDA lender about your specific situation.
What if my income is slightly above the limit?
You do not may have access to. The USDA's income limits are firm — there is no wiggle room. If your household income is $1,000 over the limit, you cannot get a USDA loan. Some people reduce their household size by having an adult child move out, which raises the per-person limit, but this must be genuine and documented.
Do I need to live in the home I am buying?
Yes. USDA loans are for primary residences only. You cannot use a USDA loan to buy a rental property or a vacation home. You must intend to live in the home as your main residence.
Can I get a USDA loan if I am self-employed?
Yes, but the process takes longer. You will need to provide two years of tax returns, a profit-and-loss statement for the current year, and sometimes a letter from your accountant. The lender will average your income over two years to smooth out year-to-year fluctuations.
What happens if the property is just outside the USDA-may be able to access area?
You cannot get a USDA loan. The location requirement is absolute. If the address is outside the rural boundary, no lender can approve you for a USDA loan, even if the property is only a few blocks away from an may be able to access area. You would need to look at conventional or FHA loans instead.