How to Qualify for a USDA Home Loan in the United States

The United States Department of Agriculture (USDA) offers home loans to individuals and families looking to purchase a home in rural areas of the country. These loans are designed to help low- to moderate-income households afford the costs of home ownership. The USDA home loan program is a great option for those who may not qualify for a conventional mortgage loan due to income or credit score limitations. However, before applying, it’s important to understand the eligibility requirements and the application process. In this article, we will walk you through the steps you’ll need to take to qualify for a USDA home loan.

Eligibility Requirements

To qualify for a USDA home loan, you’ll need to meet certain eligibility requirements. These include:


Your household income must fall below a certain limit, which varies depending on the area of the country where you’re looking to purchase a home. The USDA uses median income levels for the area to determine the income limit. This means that if you live in an area with a higher cost of living, the income limit will be higher. You can check the income limits for your area on the USDA website.


The home you’re looking to purchase must be located in a USDA-designated rural area. The USDA defines a rural area as one that is located outside of a metropolitan statistical area or urban area. However, it’s important to note that some suburban areas may also qualify as rural areas. You can check the eligibility of a specific address on the USDA website.

Credit score

You’ll need to have a credit score of at least 620 to qualify for a USDA home loan. However, some lenders may require a higher credit score.

Debt-to-income ratio

Your debt-to-income ratio, which is the amount of debt you have compared to your income, must be less than 41%. This means that your monthly debt payments should not exceed 41% of your gross income.

Other factors

You’ll also need to meet other requirements, such as being a U.S. citizen or legal permanent resident and having a stable income. Additionally, you’ll need to be able to afford the closing costs and have enough money for a down payment, which can vary depending on the lender.

The USDA Home Loan Application Process

Once you’ve determined that you meet the eligibility requirements for a USDA home loan, you’ll need to start the application process. This involves:

Finding a lender

You’ll need to find a lender that participates in the USDA home loan program. You can find a list of approved lenders on the USDA website. It’s important to shop around and compare the interest rates and fees from different lenders to ensure that you get the best deal.

Gather documents

You’ll need to gather and provide the lender with the required documents, such as your income and employment information, tax returns, and bank statements. You’ll also need to provide proof of your citizenship or legal permanent resident status, and proof of insurance for the property.

Submit the application

After you’ve gathered all the necessary documents, you’ll submit your application to the lender. This can typically be done online or in person.


The lender will then review your application and determine whether you qualify for a USDA home loan. The lender will also order an appraisal of the property to ensure that the value of the home is sufficient to secure the loan.


If you’re approved, the lender will work with you to close on the loan and purchase the home. This typically includes signing a mortgage agreement and paying closing costs, which can include origination fees, title search fees, and other charges. Closing costs can vary depending on the lender, so it’s important to ask for an estimate of the costs before committing to the loan.

It’s important to note that a USDA home loan comes with certain restrictions. For example, you’ll need to live in the home as your primary residence and you’ll be required to pay an annual fee, known as a “guarantee fee,” which helps to fund the USDA home loan program. Additionally, you’ll be required to maintain the property and keep it in good condition.

Overall, a USDA home loan can be a great option for those looking to purchase a home in a rural area of the United States. By understanding the eligibility requirements and the application process, you can increase your chances of qualifying for a loan and achieving the dream of homeownership. It’s also important to work with a lender that you trust and who can guide you through the process. With the right preparation and guidance, you can take the first step towards homeownership with a USDA home loan.

Our Services
No results found.