USDA Rural Housing Loans

What is USDA Rural Housing Loans?

USDA Rural Housing Loans is a first mortgage for homebuyers in Texas.

• USDA Rural Development Section 502 Guaranteed Loan Program offers 100% financing (no down payment) for low-to-moderate income households purchasing in eligible rural areas of Texas. Features competitive fixed rates, no PMI, and flexible credit standards. Upfront guarantee fee of 1% and annual fee of 0.35% apply instead of PMI.
• $0 down payment required.
• 100% financing available.
• competitive fixed interest rates.
• no private mortgage insurance (PMI).
• flexible credit requirements (minimum 640 score).
• no first-time homebuyer requirement.
• upfront guarantee fee of 1% can be financed into loan.
• annual fee of 0.35% (much lower than FHA MIP).
• seller concessions up to 6% allowed.
• available for purchase of modest single-family homes in USDA-eligible rural areas of Texas.
• This is a federal program, so it is available beyond a single state or city.
• Funding comes from Federal.

How much assistance does it provide?

USDA Rural Housing Loans provides assistance worth 100% of the purchase price, as set by the program.

• Amounts are the program's published maximums, not an offer — the administering agency determines any individual award.

Do you have to pay it back?

USDA Rural Housing Loans is a first mortgage and is repaid under the terms set by the administering agency.

• Repayment is triggered by Sale, Refinance, and No Longer Primary.
• The assistance is recorded in 1st Lien position.
• Forgiveness and repayment terms are set by the program and can change — confirm them on the official program page before applying.

Who qualifies?

USDA Rural Housing Loans is open to buyers who will live in the home as their primary residence.

What are the income limits?

USDA Rural Housing Loans limits household income to 115% of the area median income, which varies by county and household size.

• The limit applies to total household income, not only the borrower’s.
• Area median income figures are published by HUD and updated annually, so check the current table for the county before relying on a number.

What kind of home can it be used for?

USDA Rural Housing Loans can be used for Single Family, Townhouse, Manufactured Home, Modular Home, and New Construction.

• New construction is eligible.
• Manufactured homes are eligible.

Where does it apply?

USDA Rural Housing Loans is a federal program, so it is not limited to Texas.

• The program targets specific areas: Available in USDA-eligible rural areas of Texas. Eligible areas are generally communities with populations under 35,000 that are not adjacent to large metropolitan areas. Use the USDA Property Eligibility Map to verify a specific address. Many suburban and exurban Texas communities qualify. Major metropolitan areas (Houston, Dallas, Austin, San Antonio core areas) are generally ineligible.

How do you apply?

Applications for USDA Rural Housing Loans go through the administering agency, which publishes the current terms and the application steps on its own site.

1. 1

   Contact the administering agency to reserve funds

   Funds are reserved with the provider and are subject to availability.

2. 2

   Work with a lender who handles the program

   Hey Prescott is not a lender and does not accept applications; this page describes the program so a buyer can take it to a lender or housing counselor.