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USDA Loan Eligibility

The USDA Rural Housing Loan offers amazing benefits that include $0 down payment, 100 percent financing, low interest rates and far below average mortgage insurance; however, potential homebuyers must meet a few basic requirements to be eligible for this amazing mortgage product.

USDA Credit and Income Eligibility

The USDA does not require a minimum credit score to be eligible for the USDA Rural Home Loan; however, most lenders will look for a minimum of 620 – though lower may be eligible. Additionally, potential homebuyers must have a credit history that reflects a willingness to pay and meet financial obligations.

Those with no credit score, or non-traditional credit, may also be eligible for a USDA Home Loan. In this case, your lender may ask for documents that include, but are not limited to, rental or housing payments, utility payment records, insurance payments or payments to retail locations.

Additionally, to qualify for a USDA loan, your income cannot exceed the median household income of the county by more than 115 percent. However, those with larger families do have an allowance depending on the size of your household. 2015 USDA income limits have a floor, based on household size.

For example, a 1-4 person household in Lawton, Oklahoma will have a floor of $74,750, while a 5-8 member household will have a floor of $98,650. Households of more than 8 members can add eight percent for each additional member to their 1-4 member household USDA income limit.

It is important to note that income limits vary by location. Potential USDA homebuyers living in higher cost counties will see larger income limits than those living in more modest counties.

Also be aware that certain deductions can be taken which could qualify you even if you make more than the USDA income limit in your county.

USDA Loan Property Eligibility

USDA Mortgages have specific requirements in regards to the location of the property. In short, for a property to be eligible for the USDA Loan, it must be located in what the USDA considers a rural area. Fortunately, this definition is broad enough to include many suburbs of larger cities.

Basic requirements show that eligible properties must be located in rural areas or small towns with populations of no more than 20,000. The USDA provides the above map to determine your property eligibility; however, it is best to contact a USDA approved lender before ruling yourself out. In many cases you will find that a short drive out of a major metropolitan area will put you in a USDA approved location.

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