USDA Loans

One-line summary: Zero-down-payment loans backed by the U.S. Department of Agriculture for moderate-income borrowers buying in eligible rural and suburban areas, surprisingly broad geographic eligibility, including many areas near Texas metros.

Best for

Moderate-income borrowers purchasing primary residences in USDA-eligible areas. Despite the “rural” label, the eligibility map covers significant portions of Texas, including many suburbs and small towns within driving distance of major metros.

Key terms (typical)

Attribute	Typical Range
Eligible borrowers	Household income is capped at a base of $119,850 for a 1–4 person household, scaling up to $149,800 in high-cost metro Texas MSAs
Eligible properties	Primary residences in USDA-designated rural and suburban master tracts
Down payment	Zero down required (100% financing execution)
Credit score	640 typical minimum (some lenders go lower with manual underwriting)
Mortgage insurance	Upfront guarantee fee (1% of loan) + annual fee (0.35%)
Term	30 years fixed
Property type	Single-family primary residence

Why borrowers choose this program

• Zero down payment. Like VA, USDA allows 100% financing on a purchase, with no down payment required.
• Available to non-veterans. USDA fills the same zero-down role as VA but for borrowers who don’t have military service eligibility.
• Geographic eligibility is broader than the name suggests. Many Texas areas outside major metros qualify, including parts of Hill Country, areas around Austin, San Antonio, Dallas-Fort Worth, and Houston. The USDA eligibility map is the definitive check.
• Lower monthly cost than FHA in most cases. USDA’s annual fee (0.35%) is significantly lower than FHA’s MIP, often resulting in a lower monthly payment for comparable loan amounts.

Considerations

• Income limits. Total household income cannot exceed 115% of the area median. Higher-income borrowers won’t qualify even if everything else fits.
• Property must be in an eligible area. Use the USDA eligibility map to check before getting attached to a specific property. Eligibility is updated periodically and can change.
• Primary residence only. Like VA, USDA is for owner-occupied homes only. No investment property purchases.
• Slower process than conventional. USDA loans require additional underwriting steps by the USDA itself, which can add time to close.