USDA Loan Requirements

U.S. Department of Agriculture (USDA) loans, like FHA loans, are popular among first-time home buyers. These loans are sometimes called “Rural Development Loans” and are only available in rural areas; however, 97% of the U.S. classifies as “rural” under this loan program. The USDA sets minimum income limits for these loans: $75,650 for households of one to four members and $99,850 for families with five to eight members. Income ceilings vary by county.

Unlike FHA loans, there is no federal guideline limiting the maximum loan size, although maximum loan amounts may be set by the county.

Maximum loan amounts for area counties:

• Collin County        $172,300
• Dallas County        $157,000
• Denton County      $167,600
• Tarrant County      $161,700

USDA loans require a FICO score of 620 for qualification. The USDA typically requires a debt-to-income ratio under 41%, unless you have a FICO score over 660, stable employment, or substantial savings.

Like VA loans, there is no minimum down payment. Up to 6% of closing costs can be rolled into the loan amount. USDA borrowers often get better-than-average interest rates because the USDA discounts their rates. Adjustable rate mortgages (ARMs) are not available with USDA loans; all loans are fixed rate loans. Borrowers will pay Mortgage Insurance guaranteed by the USDA for the life of the loan, protecting the lender from loss if the borrower defaults.