A USDA home loan — formally the Section 502 Guaranteed loan — lets eligible buyers finance a primary home with 0% down in areas USDA maps as rural, as long as household income is at or below 115% of the area median. Loans are made by approved lenders and backed by USDA. The answers below cover eligibility, costs, property types, and refinancing.
How to use this USDA loan FAQ
The frequently asked questions at the bottom of this page are grouped roughly in the order people run into them: first whether USDA applies at all, then qualifying, then the house, then refinancing and special programs. Each answer is short on purpose. When a topic deserves more, the answer links to the page that covers it in depth.
Two things are worth doing before reading further. First, put the address you're interested in into USDA's property and income eligibility site — if it's not eligible, most of what follows won't apply. Second, list every adult who will live in the home and roughly what each earns, because USDA counts the whole household, not just the borrowers.
USDA rules and eligibility maps change, and lenders can layer on their own requirements — Matthew will confirm what applies to your file.
USDA vocabulary in plain English
| Term | What it means |
|---|---|
| Section 502 Guaranteed | The main USDA purchase program. A private, USDA-approved lender makes the loan and USDA guarantees it. |
| Section 502 Direct | A separate program where USDA itself lends to low- and very-low-income households, applied for through a local Rural Development office. |
| Rural Development (RD) | The USDA agency that runs the housing programs and issues the final loan guarantee. |
| GUS | Guaranteed Underwriting System — USDA's automated underwriting engine. |
| Area median income (AMI) | The county's median income; the Guaranteed program caps household income at 115% of it. |
| Guarantee fee | USDA's upfront and annual fees, used in place of private mortgage insurance. |
| Section 504 | USDA home repair loans and grants for very-low-income owners, including grants for homeowners 62 and older. |
Want a straight answer for your situation? Skip the call center — Matthew will check the address, household income, and USDA options himself.
Talk with MatthewThree USDA myths to set aside
- “USDA loans are for farms.” The opposite: property that produces income, like a working farm, generally isn't eligible. USDA finances ordinary homes in eligible areas, including many small-town and edge-of-suburb neighborhoods.
- “You have to be a first-time buyer.” No. Repeat buyers can use USDA as long as they don't already own adequate housing nearby and meet the other guidelines.
- “Zero down means zero cash.” Not quite. You may still need earnest money, appraisal and inspection costs, and closing costs unless a seller, gift, or assistance program covers them. See USDA closing costs.
Have a question that isn't answered here? Ask Matthew directly.
Frequently asked questions
Is USDA Express Loans a USDA program?
No. USDAExpressLoans.com is an independent educational site run by Matthew Brown, a licensed mortgage broker, and it isn't affiliated with USDA or Rural Development. “Express” describes the short answers, the self-checks, and direct access to Matthew — it isn't a loan program and says nothing about processing time.
Does a USDA loan really allow 0% down?
Yes. The USDA Guaranteed program allows eligible buyers to finance the full purchase price — 100% financing with no down payment — subject to address eligibility, income limits, and approval. See USDA loan requirements.
What does “rural” mean for a USDA loan?
It means an area USDA has mapped as eligible, which generally includes towns and communities below certain population thresholds. Many eligible addresses are in small cities or on the outskirts of metro areas, not on farmland.
How do I check whether an address is USDA-eligible?
Enter the exact address on USDA's property and income eligibility site under property eligibility. The eligible areas map page explains how to read the result.
Can an area lose USDA eligibility?
Yes. USDA periodically updates the map, often after new census data, and some growing areas drop off. If you're house hunting near a boundary, confirm eligibility again before writing an offer.
What are the USDA income limits?
For the Guaranteed program, household income generally can't exceed 115% of the area median income, and the limit is higher for larger households. The figure varies by county. See USDA income limits.
Whose income counts toward the USDA limit?
Every adult who will live in the home, even if they aren't on the loan. Allowable deductions for dependents, childcare, and elderly or disabled household members can lower the countable total.
What credit score do I need for a USDA loan?
A 640 score is commonly used for streamlined GUS credit review. Lower scores may be manually underwritten with more documentation, and lenders may set their own overlays. See USDA credit requirements.
How long after bankruptcy or foreclosure can I get a USDA loan?
Generally about three years after a Chapter 7 discharge or a foreclosure. With Chapter 13, a file may be considered after 12 months of on-time plan payments with trustee approval. Exceptions and details vary; Matthew will confirm.
What is the USDA guarantee fee?
An upfront fee that can usually be financed into the loan, plus an annual fee collected in monthly installments. USDA publishes the current levels. See USDA guarantee fee.
Does a USDA loan have PMI?
No private mortgage insurance. The guarantee fee takes its place.
Do I have to be a first-time homebuyer?
No. Repeat buyers are eligible, provided they don't already own adequate housing in the area and meet the other requirements.
Can I use a USDA loan for a second home or investment property?
No. USDA Guaranteed loans are for a primary residence you'll occupy.
Can I keep my current home and buy with USDA?
Generally only if your current home isn't adequate — for example, it's too far from a new job or too small for the household. Matthew can walk through your situation.
Is there a USDA loan limit?
The Guaranteed program has no set maximum loan amount. The household income limit and your debt-to-income ratio effectively cap it.
Can I buy a condo with a USDA loan?
Possibly. Condos can be eligible when the project meets agency standards, and townhomes and PUDs are common USDA purchases. The address still has to be in an eligible area.
Can I buy a manufactured home with USDA?
In some cases. New and certain existing manufactured homes may qualify on a permanent foundation with specific conditions. See USDA property requirements.
Are homes with pools or acreage allowed?
An existing in-ground pool is generally acceptable. Acreage can work if the land isn't used to produce income and the site is typical for the area; the appraiser weighs in.
Can I refinance with USDA?
Only if your current loan is already a USDA loan. Options include streamlined, streamlined-assist, and non-streamlined refinances. See USDA streamline refinance.
Does USDA allow a cash-out refinance?
No. USDA refinances don't allow cash out. If you need equity, an FHA or conventional cash-out refinance may be an option.
Can closing costs be included in a USDA loan?
Sometimes. If the appraisal comes in above the purchase price, some closing costs may be financed. Sellers can also contribute up to 6% of the sales price. See USDA closing costs.
Can I use gift funds or down payment assistance?
Yes. Gifts and many assistance programs can pair with USDA for closing costs and reserves. Browse programs at Down Payment Assistance Guide or, in Texas, Texas DPA Programs.
What's the difference between USDA Direct and Guaranteed?
Guaranteed loans are made by approved lenders for households up to 115% of median income. Direct loans come from USDA itself for low- and very-low-income households and may include payment assistance. Matthew originates Guaranteed loans and can point you toward the Direct program. See Direct vs. Guaranteed.
Does USDA offer home repair grants?
Yes, through the Section 504 program for very-low-income homeowners — grants are generally reserved for owners 62 and older, with loans for others. They're handled by local USDA offices, not Matthew. See repair loans and grants.
Can Matthew help me with a USDA loan in my state?
Matthew holds licenses in several states, not all of them — tell Matthew where you're buying and he'll confirm he can help there.
Ask Matthew about your USDA home loan
Tell Matthew a little about the property and your plans. He'll follow up by phone or email — no obligation.
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