Can You Use a USDA Loan to Buy a House? Eligibility, Locations, and Costs

Updated October 31, 2026

By Stacy Schlesinger | President, Platinum Lending Solutions | NMLS #252075

When people hear the term USDA home loan, they often assume the financing is only available for farms or properties in remote rural communities.

That's a common misconception.

The U.S. Department of Agriculture offers home financing programs designed to help eligible households purchase homes in qualifying rural areas. Depending on the property's location and the buyer's qualifications, certain suburban communities may also be eligible.

And one of the most appealing features of USDA financing is the possibility of purchasing a home without a required down payment.

However, that doesn't mean every buyer or property qualifies.

A USDA Guaranteed Home Loan may let eligible buyers purchase a primary residence with no down payment. The home must be in an approved area. The household must also meet the program's income limits and other requirements.

Here's what I recommend understanding before deciding whether USDA financing might be an option for your next home purchase.

What Is a USDA Home Loan?

A USDA home loan is a mortgage program supported by the United States Department of Agriculture through its Rural Development division.

USDA offers several types of housing assistance. Borrowers working with participating mortgage lenders will usually be looking at the Single Family Housing Guaranteed Loan Program. It is also called a Section 502 Guaranteed Loan.

Under this program, approved lenders originate mortgages for eligible borrowers, and USDA provides a guarantee that reduces a portion of the lender's risk.

This arrangement allows qualified borrowers to obtain financing with features that may differ from conventional mortgage programs.

Some important characteristics include:

• No required down payment for eligible borrowers
• A 30-year fixed interest rate
• Income eligibility requirements
• Property location restrictions
• Primary-residence occupancy requirements
• Upfront and annual guarantee fees
• Mortgage approval based on applicable credit, income, debt, and property guidelines

USDA also operates a separate Direct Loan Program with different eligibility requirements and application procedures.

We'll explain that distinction later in the article.

You can review the official USDA Single Family Housing Guaranteed Loan Program for current program information.

Do You Have to Live on a Farm to Qualify for a USDA Loan?

No.

You don't need to be a farmer, work in agriculture, or purchase a working farm to use USDA's residential guaranteed mortgage program.

The program is intended to support qualifying homeownership in eligible rural areas.

That includes some communities that may not look particularly rural to a prospective homebuyer.

However, the property must fall within USDA's designated eligible area.

And the property must satisfy applicable residential and program requirements.

A home located on agricultural land isn't automatically eligible simply because it's associated with farming.

USDA Guaranteed Loans aren't intended to finance income-producing farming operations or commercial properties.

The property's actual location, use, and characteristics matter.

Where Can You Use a USDA Loan in Oregon or Washington?

Property location is one of the first things to evaluate when considering USDA financing.

USDA maintains geographic eligibility boundaries that identify where its housing programs may be used.

Some communities outside major metropolitan areas may qualify, while other areas are excluded.

And you shouldn't assume an entire city or ZIP code is eligible simply because part of the surrounding area appears rural.

For example, someone searching for a home near Oregon City, Oregon, may want to investigate whether a particular address falls within an eligible USDA area.

Similarly, a buyer considering properties outside Tacoma, Washington, would need to verify the actual address rather than relying on a general description of the community.

These examples don't mean that Oregon City or Tacoma, or the areas surrounding them, automatically qualify.

Eligibility needs to be evaluated property by property.

How to Check USDA Property Eligibility

USDA provides an online tool that allows prospective borrowers to review eligible geographic areas.

You can access the USDA Property and Income Eligibility website.

Choose the Single Family Housing Guaranteed program's property map. Then search for the exact address you are considering.

Keep in mind that the map is an informational tool.

USDA makes the final property eligibility determination under the applicable program requirements.

My advice: Before becoming committed to a particular property based on the possibility of USDA financing, have its eligibility reviewed with your mortgage professional.

What Are the Income Limits for a USDA Home Loan?

Unlike many traditional mortgage programs, USDA Guaranteed Loans have household income eligibility limits.

For the Guaranteed Loan Program, an applicant's adjusted household income generally cannot exceed 115% of the applicable area median household income, as determined under USDA's program rules.

However, this doesn't mean every household in Oregon or Washington has the same income limit.

Limits vary based on geographic area and household circumstances.

USDA updated the Guaranteed Loan Program's income limits in July 2026, so borrowers should use the current published limits rather than figures from older mortgage articles.

Household Income Is Different From Qualifying Mortgage Income

This distinction is especially important.

USDA generally evaluates household income to determine whether the household is eligible for the program.

That review may include income from certain household members who aren't borrowers on the mortgage.

The program also has rules regarding applicable deductions and exclusions.

Separately, the lender evaluates the income that can be used to qualify the mortgage applicants for repayment.

Those are different calculations.

For example, someone may have enough qualifying income to support a proposed mortgage payment but exceed USDA's applicable household income limit.

Another household may fall below the program's income limit but still need to demonstrate sufficient qualifying income to repay the mortgage.

Meeting the USDA income limit doesn't automatically mean you'll qualify for the loan.

For a preliminary review, use USDA's official eligibility website and discuss the household's circumstances with an approved lender.

Do USDA Loans Really Require No Down Payment?

For eligible borrowers, the USDA Guaranteed Loan Program permits financing without a required down payment.

That's an important difference from many other mortgage programs.

However, no down payment doesn't mean no money is needed to purchase the home.

Depending on your transaction, you'll still need to account for expenses such as:

• Mortgage closing costs
• Homeowners insurance
• Prepaid mortgage interest
• Initial escrow deposits
• Property inspections
• Other applicable transaction expenses

Some allowable costs may be covered through permitted seller contributions, lender credits, or other acceptable arrangements.

Certain costs may also be eligible for financing under USDA's program requirements.

But those options depend on the actual transaction and financing terms.

You shouldn't assume every expense can be financed or that you'll automatically qualify for a purchase without providing any funds.

For additional information, read our guide to understanding cash to close.

What Are the Credit Requirements for a USDA Loan?

USDA's Guaranteed Loan Program doesn't establish one universal minimum credit score that automatically determines whether every applicant qualifies.

However, borrowers must demonstrate acceptable credit and the ability and willingness to repay their obligations.

Participating lenders may also apply additional credit-related requirements.

The lender will generally evaluate factors such as:

• Credit history
• Existing monthly debts
• Qualifying income
• Payment history
• Available assets
• Other applicable underwriting considerations

A borrower with limited traditional credit history may have options for demonstrating acceptable credit under USDA's guidelines.

However, alternative credit documentation doesn't guarantee approval.

And having an acceptable credit score doesn't automatically establish program eligibility.

Income limits, property location, repayment ability, and other requirements still apply.

Have your credit and finances reviewed before ruling yourself out. A score from a consumer credit app alone does not determine USDA eligibility.

How Much House Can You Buy With a USDA Loan?

USDA Guaranteed Loans don't have one universal maximum purchase price that applies to every borrower.

Instead, the amount available depends on factors such as:

• Your qualifying income
• Monthly debt obligations
• Credit and other financial considerations
• Mortgage interest rate
• Property taxes and insurance
• Applicable homeowners association dues
• The property's appraised value
• Applicable lender and USDA requirements

The purchase must also satisfy the program's property standards.

Even if a particular home is located in an eligible area, that doesn't mean every borrower can finance that property.

A lender must still determine whether the proposed mortgage is affordable under the applicable underwriting guidelines.

And remember that the amount you qualify to borrow may differ from the payment you'd personally be comfortable managing.

I recommend reviewing the total housing expense rather than concentrating only on the absence of a down payment.

Does a USDA Loan Have Mortgage Insurance?

USDA Guaranteed Loans don't use conventional private mortgage insurance, or PMI, in the same way many conventional mortgages do.

However, USDA financing includes guarantee fees that help support the program.

These costs are important to include when comparing USDA financing with other loan options.

Upfront Guarantee Fee

As of October 2026, USDA's fiscal year 2027 Guaranteed Loan Program applies an upfront guarantee fee of 1.00%.

Under applicable program rules, the upfront guarantee fee may be eligible to be financed into the mortgage.

Financing the fee increases the amount borrowed and can increase the overall cost of the loan.

Annual Guarantee Fee

For fiscal year 2027, the program also applies an annual guarantee fee of 0.35%.

The annual fee is calculated using the scheduled outstanding principal balance under USDA's rules. It is generally collected through monthly payments.

The amount can change over the life of the mortgage as the applicable loan balance changes.

These are USDA's announced program fee rates for fiscal year 2027, which began October 1, 2026. Program fee structures may change in future years.

My advice: When comparing USDA financing with conventional, FHA, or other loan programs, look at the complete monthly payment and upfront expenses—not just the down payment requirement.

USDA Loan Costs: What Should You Compare?

Here's a practical overview of the costs and features borrowers should evaluate.

Feature	USDA Guaranteed Loan consideration
Down payment	No down payment required for eligible borrowers
Loan term	30-year fixed-rate mortgage
Interest rate	Determined by the participating lender and transaction
Upfront guarantee fee	1.00% for fiscal year 2027
Annual guarantee fee	0.35% for fiscal year 2027
Closing costs	Applicable expenses still need to be addressed
Property taxes and insurance	Included in the total housing expense
Property location	Must satisfy USDA geographic eligibility
Household income	Must meet applicable USDA income limits
Occupancy	Must be an eligible primary residence

A mortgage professional can help compare these features with the costs of other loan programs for which you may qualify.

What Types of Homes Can Be Purchased With USDA Financing?

USDA Guaranteed Loans may be used for different types of eligible residential properties.

Depending on the property and applicable program requirements, this can include certain:

• Existing detached homes
• Newly constructed homes
• Attached homes and planned-unit developments
• Condominiums
• Manufactured or modular homes

However, inclusion in a general property category doesn't mean every property of that type qualifies.

For example, manufactured housing and condominiums may have additional requirements.

The home must also meet applicable property standards and be intended for eligible residential use.

Certain repairs or rehabilitation activities may be permitted under USDA's rules, but financing a property requiring substantial work can involve additional conditions.

Before making an offer, discuss the property's type, condition, and intended use with your mortgage professional.

Can You Use a USDA Loan for a Second Home or Investment Property?

Generally, no.

The USDA Guaranteed Loan Program is intended for eligible properties that borrowers will occupy as their primary residence.

It's not designed to finance vacation homes, rental investments, or commercial property acquisitions.

If you plan to buy a house mainly to rent to tenants, review investment-property loans. Do not assume USDA financing is available.

The same applies to someone purchasing a vacation property they don't intend to occupy as their principal residence.

If you're considering more than one property type, it's worth discussing the appropriate occupancy classification and available loan programs before applying.

Visit our Mortgage Loan Options page for additional information about different categories of financing.

Is a USDA Loan Only for First-Time Homebuyers?

No.

USDA's Guaranteed Loan Program isn't limited to first-time buyers.

Someone who has owned a home previously may still qualify, provided the borrower, household, and property satisfy the program's requirements.

However, eligibility for another primary-residence purchase can involve additional considerations, particularly if the applicant already owns suitable housing.

The lender needs to evaluate those circumstances under USDA's applicable guidelines.

The important thing is not to assume that previous homeownership automatically disqualifies you—or that you can retain an existing property without affecting eligibility.

Discuss your ownership situation before relying on USDA financing for another purchase.

What's the Difference Between USDA Guaranteed and USDA Direct Loans?

USDA offers two major single-family home purchase programs that are sometimes confused.

They're different programs with different eligibility requirements and application processes.

Feature	USDA Guaranteed Loan	USDA Direct Loan
Financing arrangement	Mortgage through an approved participating lender	Loan provided through USDA Rural Development
Intended applicants	Eligible low- to moderate-income households	Primarily eligible low- and very-low-income households
Down payment	Generally not required for eligible borrowers	Generally not required, subject to program rules
Loan term	30-year fixed	Different terms may apply
Payment assistance	Not structured like the Direct Loan payment assistance program	Certain eligible applicants may qualify for payment assistance
Application	Through an approved lender	Through USDA Rural Development

The Direct Loan Program can also involve area loan limits and other requirements that differ from the Guaranteed Loan Program.

A borrower shouldn't assume that qualifying for one USDA program means they qualify for the other.

The financing discussed in this article primarily concerns the USDA Single Family Housing Guaranteed Loan Program.

For more information about both options, visit USDA Rural Development's Single Family Housing Programs.

USDA vs. FHA vs. Conventional: Which Loan Should You Consider?

USDA financing may be worth exploring when a borrower meets the household income limits and is purchasing an eligible primary residence.

However, it shouldn't automatically be selected simply because it offers the possibility of no down payment.

Other mortgage programs may have different costs or eligibility requirements.

USDA Guaranteed Loans

These may offer no-down-payment financing for eligible households purchasing qualifying primary residences in USDA-approved areas.

They also include location restrictions, income limits, and guarantee fees.

FHA Loans

FHA financing may be available for eligible primary-residence purchases without USDA's rural property location requirement.

FHA loans have their own down payment, mortgage insurance, property, and underwriting requirements.

Conventional Loans

Conventional mortgage programs may offer financing with relatively small down payments for eligible borrowers.

Conventional loans generally don't use USDA's household income limits or rural location rules. However, individual conventional programs may have their own income limits and other restrictions.

Mortgage insurance may be required depending on the loan structure.

The appropriate financing depends on the borrower, property, available terms, and financial goals.

My recommendation: Compare the total upfront costs, monthly payment, and loan requirements before deciding which program to pursue.

How Do You Apply for a USDA Home Loan?

If you're considering USDA Guaranteed financing, here's the general process.

Step 1: Check the Property Location

Review whether the property appears to fall within a USDA-eligible area.

Use the official property eligibility map for an initial review, recognizing that USDA makes the final determination.

Step 2: Review Household Income Eligibility

Determine whether your adjusted household income may fall within the applicable USDA limit.

The calculation depends on household composition, location, and program rules.

Step 3: Contact a Participating Mortgage Lender

A USDA-approved lender can review your financial circumstances and explain the current program requirements.

Not every mortgage provider offers the Guaranteed Loan Program.

Step 4: Complete the Mortgage Qualification Review

The lender evaluates qualifying income, credit, debts, assets, and other applicable underwriting considerations.

Additional documents may be needed.

Step 5: Complete the Property and Underwriting Requirements

The property must satisfy USDA and lender requirements.

An appraisal and other applicable property reviews may be necessary.

Step 6: Review the Loan Terms and Closing Costs

Before proceeding, review the rate, guarantee fees, and monthly payment. Also check closing costs and the cash you will need.

Your mortgage professional should explain the Loan Estimate and any important financing conditions.

You can learn more about preparing for a mortgage application on our Mortgage Pre-Approval page.

What If the Property Doesn't Qualify for USDA Financing?

If the property isn't in an eligible USDA area, that doesn't necessarily mean you can't purchase it.

It means the USDA Guaranteed Loan Program may not be available for that particular property.

Depending on your qualifications, conventional, FHA, VA, or other mortgage programs may be worth evaluating.

The same is true if your household income exceeds the USDA limit or the property doesn't meet another eligibility requirement.

Before changing your home search, ask why the home or household is ineligible. Then review whether another loan program may fit.

Frequently Asked Questions

Can you buy a house with a USDA loan and no down payment?

Yes, eligible borrowers may qualify for USDA Guaranteed financing without a required down payment. However, closing costs, guarantee fees, prepaid expenses, and other transaction costs still need to be addressed.

Are USDA loans only available in rural areas?

USDA financing is limited to designated eligible areas. Some qualifying locations may be suburban in character, but eligibility must be checked for the specific property address.

What is the maximum income for a USDA loan?

For the Guaranteed Loan Program, adjusted household income generally cannot exceed 115% of the applicable area median household income. Actual limits depend on location and household circumstances.

What credit score do you need for a USDA loan?

USDA doesn't establish one universal minimum credit score for its Guaranteed Loan Program. Participating lenders evaluate creditworthiness under applicable requirements and may have additional criteria. A particular score doesn't guarantee approval.

Can you use a USDA loan if you've owned a home before?

Potentially. The program isn't limited to first-time buyers, but existing homeownership and other eligibility requirements must be reviewed under USDA guidelines.

Do USDA loans have PMI?

USDA Guaranteed Loans don't use conventional PMI in the same manner as many conventional mortgages. However, they have upfront and annual guarantee fees that affect financing costs.

Can you use a USDA loan to buy a rental property?

Generally, no. The USDA Guaranteed Loan Program is intended for eligible primary residences, not investment or vacation properties.

How do you find out if a house qualifies for USDA financing?

Start with USDA's official online property eligibility map. Then have an approved participating lender review the address and your eligibility. The map itself doesn't constitute a final USDA determination.

Does a USDA loan have a maximum purchase price?

The Guaranteed Loan Program doesn't use one universal maximum purchase price for all borrowers. Loan eligibility depends on repayment ability, property value, and applicable program requirements.

Can you refinance a USDA loan later?

Potentially. USDA provides certain refinancing options for eligible existing USDA borrowers. Availability depends on the specific program, loan history, borrower circumstances, and current requirements. Future refinancing isn't guaranteed.

The Bottom Line: USDA Financing May Be Worth Exploring

USDA Guaranteed Loans can provide an opportunity for eligible borrowers to purchase a primary residence without a required down payment.

But the program comes with important qualifications.

The property's location matters. Household income must fall within the applicable limits. The borrower must qualify for the mortgage, and the home must meet the program's requirements.

There are also upfront and annual guarantee fees to consider.

After more than 25 years in mortgage lending, I encourage buyers to compare the complete financing arrangement rather than focusing on just one feature, such as the down payment.

A USDA loan may be worth exploring for some Oregon and Washington homebuyers, but the right financing choice depends on the actual property, borrower qualifications, costs, and available programs.

Wondering whether USDA financing or another mortgage program might fit your homebuying plans?

At Platinum Lending Solutions, we help borrowers throughout Oregon and Washington review mortgage financing options and understand the requirements that apply to their transactions.

I'm happy to discuss your homebuying goals and help you identify the options worth evaluating.

Ask Stacy Your Mortgage Question

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About the Author

Stacy Schlesinger is the President of Platinum Lending Solutions, an independent mortgage brokerage serving Oregon and Washington. With more than 25 years of mortgage lending experience, Stacy helps homebuyers evaluate financing options and navigate the mortgage process.

Stacy Schlesinger | NMLS #252075

Platinum Lending Solutions | Company NMLS #251560

Oregon License #ML-4475 | Washington License #WA CL-251560

Content reviewed October 31, 2026. This article is provided for general educational purposes and is not a commitment to lend or an offer of specific mortgage terms. USDA program eligibility, geographic designations, household income limits, guarantee fees, loan availability, rates, costs, and underwriting requirements are subject to change. Program availability depends on participating lenders and individual transaction requirements. All loans are subject to credit approval.