USDA home loan requirements: income limits, map and fees

A U.S. Department of Agriculture (USDA) home loan has two main requirements. The home must be in an area USDA counts as rural. Your household's income must also be at or under the county's income limit, the most a household can earn and still qualify. With USDA's guaranteed loan, you can buy with no down payment.

What are the two USDA home loans?

USDA has two home loans for buyers, officially called Section 502 loans. With the guaranteed loan, a private lender such as a bank lends you the money. USDA promises the lender it will cover most of its loss if you stop paying. With the direct loan, USDA lends you the money itself.

Because USDA covers most of the loss if a guaranteed loan isn't repaid, the lender can lend you the whole price. The loan can't be more than the lower of two amounts: the home's appraised value plus USDA's upfront fee, or the price plus eligible closing costs. The appraised value is what a licensed appraiser, hired for the loan, says the home is worth. The loan has to have a fixed rate and run 30 years or less. Each lender sets its own rate, so compare offers from more than one.

Is the home in an eligible area?

Whether a home qualifies depends on its exact address, not on the town's name. Type the address into USDA's eligibility site, or look it up on the map there. The map is a guide: USDA Rural Development makes the final decision when it gets your complete application.

The federal law on rural areas sets the population rules. Open country and towns of up to 10,000 people can qualify. In narrow cases, so can places of up to 20,000 people outside a big metro area where loans are hard to get. Some towns of up to 35,000 people that counted as rural in the past also keep counting until the results of the 2030 census come in. They must still be rural in character, and loans must be hard to get there. Population alone doesn't decide it, so check each address on the map.

The home must be your main home, and you can't use it mainly to earn money, for example as a rental. It must be safe and in good repair, or be repaired with the loan. USDA's program page lists houses, townhouses, condominiums, modular homes and manufactured homes. Manufactured homes have extra rules, so ask your lender before you look at one.

You must be a U.S. citizen, a U.S. national or a qualified alien, a non-citizen with a status federal law accepts, such as a green card holder. The federal definitions list who counts.

What is the income limit?

Under the federal eligibility rule, your household's yearly income after deductions must be at or under USDA's limit when the loan is approved. USDA calls this the moderate income limit, and it sets one for each county or metro area.

The limit is the highest of three figures based on national, state and local incomes. So it is never lower than 115% of the national median family income, the middle income of all U.S. families. For fiscal year 2026, that floor is $122,800 for 1–4 people and $162,100 for 5–8. The limit is higher where incomes are high. Look up your county in USDA's income tool on the eligibility site. Our guide to area median income explains how these limits are set.

Households of nine or more have a higher limit again. A county limit doesn't mean every address in the county is on the rural map: check both.

Whose income counts?

The federal income rule counts the income of everyone who normally lives in the home, whether or not they will be on the loan. Only live-in aides and foster children or foster adults are left out.

Income includes pay, overtime, bonuses, self-employment income, interest and rent from property, plus income from savings and other assets. Some money isn't counted, such as the pay of children under 18, student aid and one-time gifts.

USDA then subtracts deductions. These include a set amount for each child under 18, each full-time student and each person with a disability, other than you and your spouse. Child care for children 12 and under counts too, and older or disabled households can deduct some medical costs.

A worked example. Two adults earn $70,000 and $60,000. Their adult son lives with them and earns $20,000, and a child under 18 lives there too. That makes four people with $150,000 of income before deductions. In Mecklenburg County, the limit for four people is $135,000.

USDA subtracts a set amount for the child: about $500. That still leaves the household about $14,500 over the limit, so it would need other deductions, such as child care, to qualify. That is true even if only the two parents are on the loan. Your lender does the exact calculation.

How do lenders check that you can afford the payment?

Being under the income limit is only the first test. Under the federal eligibility rule, your monthly housing payment should be no more than 29% of your income. That payment includes the loan, property taxes, home insurance, USDA's annual fee and any homeowner association dues, the monthly fee some condos and neighborhoods charge for shared upkeep. All your monthly debts together, including that housing payment, should be no more than 41% of your income.

A lender can approve higher amounts when you have strong reasons, such as a credit score of 680 or higher, savings left after closing, or a steady job. For example, if your household earns $5,000 a month, the usual limits are a $1,450 housing payment and $2,050 for all debts together.

USDA sets no minimum credit score. USDA's automated system weighs your score along with the rest of your application, and each lender can set its own minimum. Ask more than one lender what score it needs.

What are the fees?

USDA charges two fees on a guaranteed loan. For loans USDA approves between October 1, 2026 and September 30, 2027, USDA's notice for that year sets them at:

• An upfront fee of 1% of the loan, paid once at closing. The lender pays it to USDA and usually passes it to you, and it can be added to the loan.
• A yearly fee of 0.35% of the loan balance, which the lender usually adds to your monthly payment.

On a $200,000 loan, that is a $2,000 upfront fee. The yearly fee is about $700 at first, or about $58 a month, and it shrinks as you pay down the loan. USDA can change both fees each year, up to the most the federal fee rule allows: 3.5% upfront and 0.5% a year. The fees on your loan are the ones in effect when USDA gives your lender its written approval to guarantee the loan, called the Conditional Commitment.

On top of USDA's fees, the lender charges interest and closing costs. Closing costs are the fees for setting up the loan and transferring the home, paid on the day you sign. You can include some closing costs in the loan.

How do you apply, step by step?

1. Check the address on USDA's eligibility site before you make an offer on a home.
2. Check your income in USDA's income tool on the same site, counting everyone who lives with you.
3. Choose an approved lender for a guaranteed loan, and compare rates and fees from at least two. For a direct loan, contact your local USDA Rural Development office instead.
4. Take a homebuyer class if your lender asks. Lenders may require one for first-time buyers. A housing counselor can teach the class and help you prepare. Find one approved by HUD, the U.S. Department of Housing and Urban Development, with HUD's counselor search or the Consumer Financial Protection Bureau's counselor search.
5. Look for homes you may qualify for. Use the qualify check on our listings, or browse homes by place on our affordable housing pages.

To compare USDA with other ways to buy, read our guides to first-time home buyer programs and to the FHA loan requirements, for loans insured by the Federal Housing Administration. An FHA loan needs at least 3.5% down, while a USDA guaranteed loan needs none.