The Basic Requirements for a USDA Loan
A USDA loan requires four things: a property in an may be able to access rural area, a household income below the area limit, a credit score of at least 580 (though 640 is safer), and the ability to repay the loan. You do not need a down payment — that is the main difference from conventional mortgages. The USDA does not lend the money itself; instead, it guarantees the loan through a bank or mortgage lender, which means you apply through a lender, not directly to the USDA.
The property must be a single-family home in a designated rural area. The USDA publishes an online map showing which counties and towns may have access to; some suburbs of large cities are included, others are not. You can check your address on the USDA Rural Development website before you spend time on an application. The home cannot be in a city proper or in an area the USDA classifies as urban or suburban.
Income limits vary by county and family 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. Your household income is calculated from tax returns and pay stubs, and it includes everyone living in the home who will be on the loan. You will need to provide the last two years of tax returns and recent pay stubs (usually the last 30 days) to prove your income.
Key Takeaways
- Your property must sit in a USDA-designated rural area, which you can verify on the USDA Rural Development website before applying.
- Household income limits are set by county and family size, and you prove income with two years of tax returns plus recent pay stubs.
- A credit score of 580 or higher is the minimum, but most lenders prefer 640 or above to reduce their risk.
- You must be a U.S. citizen or permanent resident and have a valid Social Security number to be considered.
- Debt-to-income ratio cannot exceed 41 to 43 percent depending on the lender, meaning your monthly debt payments cannot be more than that percentage of your gross monthly income.
Credit Score and Debt-to-Income Ratio
The USDA sets a minimum credit score of 580, but most lenders will not approve you at that score. In practice, lenders typically want 620 to 640 or higher. Your credit score comes from your credit report, which shows your payment history on credit cards, car loans, student loans, and other debts. If you have late payments, collections, or a bankruptcy within the last three years, approval becomes much harder.
Your debt-to-income ratio is the percentage of your gross monthly income that goes to debt payments. The USDA allows up to 41 percent, though some lenders go to 43 percent. To calculate it, add up all your monthly debt payments — car loans, credit cards, student loans, child support, and the new mortgage payment — and divide by your gross monthly income. If you earn $5,000 per month and your debts total $2,000 per month, your ratio is 40 percent. A lender will run this calculation and may ask you to pay down debt before they approve the loan.
Citizenship and Social Security Requirements
You must be a U.S. citizen, a permanent resident (green card holder), or a may have access to non-citizen. A may have access to non-citizen includes certain visa holders and refugees, but the rules are narrow. Most people applying are citizens or permanent residents. You will need a valid Social Security number, which the lender verifies through the Social Security Administration.
If you are applying with a spouse or co-borrower, each person on the loan must meet these requirements. If one person is a permanent resident and the other is a citizen, both can be on the loan as long as both have Social Security numbers and both meet income and credit requirements.
Property may be able to access and Location Verification
The USDA defines rural as areas outside cities and suburbs with populations under 10,000 to 20,000, depending on the county. The exact boundary changes by region. Some towns of 5,000 people are may be able to access; some towns of 8,000 are not. The only way to know for certain is to check the address on the USDA Rural Development website or ask your lender to verify it.
The property must be a single-family detached home. Condos, townhouses, mobile homes on leased land, and multi-unit properties do not may have access to. The home must be your primary residence — you cannot use a USDA loan to buy a vacation home or investment property. The house must be in reasonable condition and meet minimum property standards, which a USDA appraiser will inspect.
Income Calculation and Documentation
Income includes wages, salary, self-employment income, Social Security, disability payments, alimony, child support, and rental income. It does not include one-time payments like tax refunds or inheritance. If you are self-employed, the lender will average your income over two years using your tax returns. If you started self-employment within the last two years, approval is harder and some lenders will decline you.
You will submit your last two years of complete tax returns (all pages, including schedules), recent pay stubs covering at least 30 days, and a letter from your employer stating your job is permanent. If you receive Social Security or disability, you will need a benefit statement showing the monthly amount. If you are divorced or receive child support, you will need the divorce decree or support order. The lender verifies income by contacting your employer and pulling your tax transcripts directly from the IRS.
Employment and Income Stability
The USDA and lenders want to see stable employment. If you have changed jobs within the last two years, you will need to explain the change. A job change within the same field or a promotion is usually acceptable. Changing careers, a gap in employment, or frequent job changes raises red flags. If you have been unemployed in the past two years, you may still be approved, but the lender will want documentation showing you are now employed and the unemployment was temporary.
If you are in a probationary period at a new job, some lenders will wait until the probation ends before approving the loan. Others will approve you but require a letter from your employer stating the job is permanent. Self-employed people face stricter scrutiny; you typically need two years of tax returns showing consistent or growing income, and some lenders require three years.
Frequently Asked Questions
Do I need a down payment for a USDA loan?
No. The USDA loan covers 100 percent of the home price, which is why it is popular for first-time buyers. You will still pay closing costs (typically 2 to 5 percent of the loan amount), which you may be able to roll into the loan or ask the seller to cover.
What if my income is above the limit for my county?
You do not may have access to for that county. Income limits are strict and do not have exceptions. You can only apply in counties where your household income falls below the limit. If you are near the limit, moving to a different county with a higher limit is an option, but you must actually move before applying.
Can I get a USDA loan if I have had a bankruptcy?
A bankruptcy within the last three years is a major obstacle. Most lenders will decline you. If your bankruptcy was discharged more than three years ago and you have rebuilt credit since then, some lenders will consider you, but approval is not certain. You will need to explain the bankruptcy in writing and show stable income and on-time payments since discharge.
What happens if the property is not in an may be able to access rural area?
The loan cannot be approved. The USDA will not may provide a loan on a property outside its designated rural areas. If you discover after making an offer that the property does not may have access to, you will need to find a different property or pursue a conventional loan instead.
Do I need to be a first-time homebuyer?
No. The USDA does not require you to be a first-time buyer, though some programs do prioritize first-time buyers. If you owned a home in the past but do not own one now, you can still apply. The main requirements are income, credit, employment, and property location — not your homebuying history.