USDA Guaranteed Rural Housing Program
USDA Loans — $0 down in rural and suburban America.
Underwritten by U.S. Dept of Agriculture Rural Development. Income-capped, property-area-capped, but one of the most borrower-friendly programs on the market when you qualify.
At a glance
What makes a USDA loan different
Down payment
0%
No down payment required in USDA-eligible areas.
Area eligibility
Rural & suburban
Covers most counties outside metro cores — check the USDA map before assuming your area is out.
Income limits
115% AMI
Household income capped at 115% of area median income (varies by county and family size).
Guarantee fees
1% + 0.35%
1% upfront guarantee fee (financed in) + 0.35% annual fee — lower than FHA MIP.
How it works
The USDA loan in plain English
USDA Rural Development guarantees the loan — similar structure to VA and FHA — which lets investors accept 0% down in eligible areas without mortgage insurance in the traditional sense. Instead, USDA charges a guarantee fee: 1% upfront (financed into the loan) plus 0.35% annual (split across 12 monthly payments). On apples-to-apples math, USDA is the cheapest ongoing carry of the three government-backed programs.
The catch — and why USDA is less common than FHA or VA — is two eligibility tests that must both pass:
1. Property must be in a USDA-eligible area. "Rural" is defined broadly — most counties outside major metro cores qualify, and in Texas / Florida / Georgia / PA / MD that includes huge tracts of suburban edge communities. But the map is granular at the census-block level. Alliance runs your exact address through USDA’s online tool on day one — do not assume yes or no based on city name alone.
2. Household income must be at or below 115% of area median income (AMI).This is HOUSEHOLD income, not just borrower income — any adult living in the home counts. For a family of 4 in a typical county, that caps around $110,000–$130,000. Larger families get higher caps. Alliance pulls your county’s exact number during pre-approval.
Underwriting itself is straightforward. Credit 640+ runs through USDA’s automated approval system (GUS); below 640 goes to manual underwriting with stronger compensating factors. USDA allows gift funds for closing costs (no down payment is needed, so gifts typically cover the closing side), and rolled-in closing costs are permitted when the appraisal supports the higher loan amount.
The honest tradeoffs: (a) primary residence only — no second homes, no investment. (b) The guarantee fee sticks for the life of the loan (like FHA MIP on less-than-10%-down loans), so refinancing to conventional once you hit 20% equity is worth modeling. (c) USDA appraisal standards enforce a "modest housing" rule — luxury features like large pools, outbuildings, or extensive acreage can trip the appraisal. Alliance flags this risk during the initial property review, not at underwriting.
The numbers
USDA parameters — 2026
Down payment required
0%
Upfront guarantee fee
1.00%
Annual guarantee fee (% of loan balance)
0.35%
Guarantee fee duration
Life of loan
Household income cap (most counties)
115% AMI
Minimum credit (most investors)
640
Property-type restriction
Primary residence only
Eligible property areas
USDA rural-eligible map
Income limits vary by county and family size. Check the exact limit for your county and household size during pre-approval. Guarantee fees are subject to annual USDA review and may be adjusted for new fiscal-year loans.
Next step
Start the numbers or start the file
Get pre-qualified
We check your address against the USDA eligibility map and your county income limit, then return a rate range — all inside one business day.
Start application →
Run the numbers
See the USDA $0-down payment including upfront + annual guarantee fee. Compare to FHA 3.5%-down on the same purchase.
Open calculator →
FAQ
What rural and suburban buyers ask us
Is my neighborhood actually USDA-eligible?
More than you might think. USDA's definition of "rural" is broad — most counties outside the immediate core of major metros qualify. In Texas, large swaths around Houston, Austin, San Antonio, and Dallas are eligible. In Florida, most of the Panhandle, much of Central Florida, and most of the state outside Tampa/Miami/Jacksonville cores qualify. The definitive answer is the USDA Rural Development property-eligibility map — Alliance runs your exact address during pre-approval and tells you yes/no in minutes.
What is the income limit for a USDA loan?
Household income — not just borrower income — is capped at 115% of the area median income (AMI) for the county, adjusted for family size. In most Texas and Florida counties, a family of 4 cap lands between $110,000 and $130,000. Larger families get higher caps. Alliance pulls your county's exact limit during pre-approval. The income test is on GROSS household income from all adult residents, not just the borrower, which sometimes surprises applicants.
How does the USDA guarantee fee compare to FHA MIP or VA funding fee?
USDA is actually the cheapest of the three government-backed programs on ongoing cost. Upfront: USDA 1.00% vs FHA 1.75% vs VA 1.25%–3.30%. Annual: USDA 0.35% vs FHA 0.50%–0.55% vs VA $0. On a $300,000 loan, USDA annual fee is ~$88/month versus FHA MIP at ~$133/month. If you fit both USDA income AND property eligibility, USDA usually beats FHA on total cost.
What credit score do I need for a USDA loan?
640 is the minimum for the USDA Guaranteed Underwriting System (GUS) automated approval path. Below 640 files go to manual underwriting, which requires strong compensating factors (reserves, low DTI, consistent housing history) and is approved case-by-case. Alliance has several USDA investors who will manually underwrite to 620 with clean files — ask during pre-approval if you are in the 620–639 range.
Can I use USDA for a second home or investment property?
No. USDA is primary-residence-only, and you must occupy the property within 60 days of closing. The program is designed specifically to expand homeownership in rural areas — second homes, flips, and rental properties are excluded. If you are buying a primary and then will rent a future home, USDA still works on THIS purchase; it just cannot be the second loan.
Can I buy a house at the edge of town on USDA?
Often, yes. USDA's eligibility map is granular — individual census blocks, not whole cities. A house on the rural side of a boundary road may qualify while the house across the street does not. Because of this, Alliance always runs the exact address through the USDA eligibility tool as the first step — not the city name. Borrowers are often surprised to find eligible properties 10–20 minutes from major metro amenities.
Ready to start?
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