USDA Loans Houston

What is a USDA Loan?

Much like the VA and the FHA the U.S. Department of Agriculture also backs mortgages to help people buy primary residences. Loans insured by the USDA are tailored for people looking to buy in more rural areas. The government backed USDA program offers many of the same benefits of a VA Loan but it also has some drawbacks that VA Loans don't.


One of the benefits of getting a USDA loan is because qualified buyers are not required to put a down payment when purchasing their home. This is great because now they don't have to spend years saving up for a down payment.

Another benefit is that USDA loans don't have a built in credit score requirement. However, most USDA lenders will have a minimum score that you'll need to hit. This will depend on the lender, but typically you will need at least a 640 or greater credit score to qualify.

Terms of Eligibility

The terms of eligibility are based on the location of the home. It must be within a qualified rural area based on the USDA Map of Eligibility which can change every year. Suprisingly many desired areas may fall within the qualified rural area designated by the USDA. You may not be able to purchase a home in or near big cities but it is recommended that you view the USDA map for reference.

The USDA has an income cap of up to 115% of the area's median income adjusted for family size. You can view the USDA guidelines and limits here.

USDA Mortgage Insurance

USDA loans come with a Mortgage Insurance requirement. It has both Upfront and Anuual insurance premium requirements.

  • Upfront: 2.75%
  • Annual: 0.5%

Another benefit is that you can finance the closing costs into the loan up to 100% of the home value. The seller may also contribute up to 6% towards your closing costs and concessions in a USDA loan. In addition, USDA buyers can use verified gift funds just like other loan types.

New rate and term assumption

In a USDA loan, a mortgage can be transfered to the new owner during the loan.