USDA Loan Requirements: Texas Eligibility and Limits

What Is a USDA Guaranteed Loan?

A USDA guaranteed loan, officially the Section 502 Single Family Housing Guaranteed Loan Program, is a mortgage made by an approved private lender and guaranteed by USDA Rural Development.

If the borrower defaults, USDA covers part of the lender’s loss. That guarantee is why the program can offer:

• No down payment. Under 7 CFR part 3555 (section 3555.103), the loan can equal the full appraised value plus the upfront guarantee fee.
• Fixed-rate, 30-year terms at rates set by the lender.
• Lower ongoing mortgage insurance than FHA through USDA’s annual fee.

Don’t confuse it with the Section 502 Direct program, where USDA lends directly to low- and very-low-income buyers. Direct loans have lower income limits (for example, $76,550 for a household of four in Potter County) and are applied for through a USDA office, not a bank.

USDA Borrower Requirements: Income, Credit, DTI and Residency

Income Limits: Household Income vs. Qualifying Income

USDA looks at income two different ways, and this is the part most buyers get wrong:

• Household (annual) income includes every adult in the home, even if they aren’t on the loan. A working adult child or a parent living with you counts. This number, after allowed deductions, must be at or under the county limit.
• Repayment (qualifying) income includes only the people signing the note. This is what the lender uses for your debt-to-income ratios.

The regulation (7 CFR 3555.152) allows deductions from household income before comparing it to the limit, including amounts for each dependent under 18, full-time students and household members with disabilities, reasonable child care for children 12 and under, and certain medical expenses for elderly families. USDA’s moderate-income limit is generally 115% of the area median, as defined in 7 CFR 3555.10.

Credit Score

USDA’s regulations don’t set a single minimum score. They require “a verifiable credit history that indicates a reasonable ability and willingness to meet their debt obligations.” In practice, files with a 640 score or higher can typically be approved through USDA’s automated system, and lower scores generally need manual underwriting with stronger documentation.

USDA flags these for extra review: a foreclosure completed within 36 months, a bankruptcy discharged within 36 months, and late rent or mortgage payments. Someone in a Chapter 13 plan with 12 months of on-time payments can still be considered.

USDA DTI Limits: 29% and 41%

Under 7 CFR 3555.151(h), you meet USDA’s repayment standard when:

• Housing ratio (PITI ratio) is 29% or less: principal, interest, taxes, insurance, HOA dues and the USDA annual fee, divided by repayment income.
• Total debt ratio is 41% or less: the housing payment plus car loans, student loans, credit cards and other recurring debts.

Ratios can go higher with compensating factors. The regulation lists a credit score of 680 or higher, a new payment close to your current rent, savings left after closing and steady employment with your current employer. Loans approved through GUS, USDA’s Guaranteed Underwriting System, don’t need separate documentation for a ratio waiver.

Residency and Occupancy

• Citizenship: applicants must be U.S. citizens, U.S. non-citizen nationals or qualified aliens, as defined in 7 CFR 3555.10.
• Primary residence: you must live in the home. USDA won’t guarantee investment properties or vacation homes.
• Current homeowners: you can qualify only if your current home no longer meets your needs, you can’t get credit elsewhere without the guarantee, and you’ll keep no more than one other home.
• Without other credit: USDA requires that you couldn’t obtain the home on your own without the guarantee.

Property Eligibility and the Texas USDA Map

USDA loans only finance homes in eligible rural areas, using the “rural area” definition in Section 520 of the Housing Act of 1949. In plain terms, most small towns and open country qualify, while larger cities and their built-up suburbs don’t. The only reliable way to know is to check the exact address on USDA’s property eligibility map.

How to use the USDA eligibility map for Texas:

1. Go to the USDA eligibility site and choose “Single Family Housing Guaranteed” under property eligibility.
2. Type the full street address, not just the town name.
3. Shaded areas are ineligible. Unshaded areas are generally eligible.
4. Save or print the result to share with your lender.

What qualifies in Texas: small towns across the Panhandle, Rolling Plains and Hill Country are typical USDA territory, such as Clarendon in Donley County or Seymour in Baylor County. Amarillo, Lubbock, Wichita Falls and the core DFW cities are not. Edges of metro areas are where the map matters most, since eligibility can change from one side of a road to the other.

The home itself must be “modest, decent, safe and sanitary.” That rules out income-producing properties like working farms, but a home on acreage can work if the land value is typical for the area. Newly built homes need the right inspections and warranty, or the loan is limited to 90% of value. If you’re buying land and building, see our guide to Texas land loans.

USDA Income Limits in Texas (Sample Counties)

These are the maximum adjusted household incomes for the USDA Guaranteed program, from USDA’s income eligibility tool as of October 16, 2026:

A county having an income limit doesn’t mean every address in it is eligible. Dallas County has a limit, but most of it is too urban for the program. Check the address on the map first, then the income.

Costs: Upfront Guarantee Fee and Annual Fee

USDA charges two fees, both of which the lender can pass on to you:

• Upfront guarantee fee: currently 1% of the loan amount. It’s usually financed into the loan. By regulation (7 CFR 3555.107(g)) it can’t exceed 3.5%.
• Annual fee: currently 0.35% of the average scheduled unpaid balance for the year, paid monthly. By regulation it can’t exceed 0.5%, and it applies for the life of the loan.

USDA reviews these rates every fiscal year, which starts October 1.

Worked Example: A $200,000 Home in Clarendon

A family of four earning $85,000 a year buys a $200,000 home in Donley County. Their income is under the $122,800 limit. Rate, tax and insurance figures are assumptions for illustration.

For comparison, the same home with FHA would need $7,000 down, and FHA’s annual MIP would run about $88 a month instead of $59.

Want to run this for a home you’re looking at? We’ll check the address, the income limit and your ratios together. Start your USDA loan pre-approval.

USDA vs. FHA vs. VA

If you’re a veteran, a VA loan usually beats USDA because there’s no monthly insurance and no location or income test. If the home is in a city or your household income is over the limit, FHA is the usual low-down-payment choice. Learn more on our Texas FHA loans page, or read how to buy a house with bad credit if credit is the sticking point.

How to Apply With an Approved Lender

You apply for a USDA guaranteed loan through a USDA-approved lender, not through USDA. Approved lenders are required to use USDA’s automated system. The usual steps:

1. Check the address on the USDA eligibility map, or ask your loan officer to.
2. Add up household income for every adult who will live in the home, then confirm it’s under the county limit.
3. Get pre-approved. Your lender pulls credit, reviews income and debts, and runs the file through GUS.
4. Make an offer once you have a pre-approval. In Texas, use the third-party financing addendum for a USDA loan.
5. Appraisal and underwriting. The appraisal checks value and that the home is safe, sound and sanitary.
6. USDA review. The lender sends the loan to USDA Rural Development for a conditional commitment.
7. Close. After closing, the lender sends the guarantee fee and requests the loan note guarantee.

Add time for the USDA review step. If USDA funding runs short late in the fiscal year, the regulation says loans to first-time buyers and veterans are processed first. For credit tips before applying, see the credit score you need to buy a house in Texas.

Buying in the Panhandle? Our Amarillo home loans team works USDA files for buyers in the surrounding towns.

Herring Bank NMLS #415783. Equal Housing Lender. This article is general information, not a commitment to lend. USDA income limits, fees and eligibility areas are set by USDA Rural Development and can change. Payment figures are illustrations only. All loans are subject to credit approval, property eligibility and USDA approval.