The USDA loan requirements Texas buyers have to meet fall into two groups: you and the house. For a USDA Guaranteed (Section 502) loan, your household's adjusted income must be at or below USDA's moderate-income limit for the county, you must be a U.S. citizen, U.S. non-citizen national, or qualified alien, you must live in the home as your primary residence, you must be unable to get traditional conventional financing, and you need a credit history and debt ratios that show you can repay. The home has to sit in a USDA-eligible rural area and be modest, decent, safe, and sanitary. There's no down payment requirement for those who qualify, and for fiscal year 2027 the fees are a 1.00% upfront guarantee fee and a 0.35% annual fee.
I'm Taylor Ring, a Mortgage Loan Officer with Fairway Independent Mortgage Corporation (The Wood Group) in Belton. This is the full checklist, pulled from USDA's regulations at 7 CFR Part 3555 and its HB-1-3555 lender handbook, read October 20, 2026. If you only need to check whether an address qualifies, my USDA home loan Texas map guide walks through that lookup step by step, and my USDA loans page covers the program basics.
Want to know if you and the home both qualify? Get Pre-Approved or Book a Free Consultation.
USDA Loan Requirements at a Glance
| Requirement | What USDA Says |
|---|---|
| Household income | Adjusted annual income at or below the moderate-income limit for the county |
| Citizenship | U.S. citizen, U.S. non-citizen national, or qualified alien |
| Occupancy | Primary residence, occupied within 60 days of closing |
| Other credit | Unable to obtain traditional conventional credit |
| Credit history | Willingness and ability to repay; USDA sets no minimum score |
| Debt ratios | 29% housing and 41% total debt, with flexibility |
| Location | Eligible rural area as designated by Rural Development |
| Property | Modest, decent, safe, sanitary; not income-producing |
| Loan terms | 30-year fixed rate only |
| Fees (FY 2027) | 1.00% upfront guarantee fee, 0.35% annual fee |
You don't have to be a first-time buyer. USDA's program flyer says it plainly: "NOT limited to First Time Home Buyers."
Borrower Requirements
1. Household Income at or Below the Moderate-Income Limit
This is the requirement that trips people up, because USDA looks at two different incomes:
- Annual income counts every household member, whether or not they'll be on the loan (7 CFR 3555.152(b)). USDA defines the household as everyone routinely living in the home, except live-in aides and foster children or adults. This is the number checked against the income limit, after deductions.
- Repayment income counts only the people who will sign the note. It's what the lender uses to figure your debt ratios.
So a working adult relative who lives with you can push your household over the limit even though they aren't borrowing.
Here are the guaranteed-loan limits USDA's income tool showed for Central Texas counties on October 20, 2026:
| County | Area USDA Uses | 1 to 4 Person Household | 5 to 8 Person Household |
|---|---|---|---|
| Bell (Temple, Belton, Killeen, Salado) | Killeen-Temple, TX HUD Metro FMR Area | $122,800 | $162,100 |
| Coryell | Killeen-Temple, TX HUD Metro FMR Area | $122,800 | $162,100 |
| McLennan (Waco) | Waco, TX HUD Metro FMR Area | $122,800 | $162,100 |
| Williamson (Georgetown, Round Rock, Cedar Park, Leander) | Austin-Round Rock-San Marcos, TX MSA | $153,550 | $202,700 |
| Travis | Austin-Round Rock-San Marcos, TX MSA | $153,550 | $202,700 |
Source: USDA Income and Property Eligibility Site, Single Family Housing Guaranteed income tool, checked October 20, 2026. USDA's income limits table labels these FY 2026 limits. For households larger than 8, USDA adds 8% of the 4-person limit for each extra person. Limits change, so check the current figure for the county where the home is.
USDA defines moderate income as the greater of 115% of the U.S. median family income, the average of the statewide and state non-metro median family incomes, or 115/80ths of the area low-income limit (7 CFR 3555.10).
Deductions lower adjusted income. Under 7 CFR 3555.152(c), USDA subtracts amounts for dependents (minors, adults with a disability, and full-time students other than the head of household or spouse), child care for children 12 and under, an elderly-family deduction, and some disability and medical expenses. On October 20, 2026, USDA's income tool applied $500 for one dependent and $550 for an elderly household. My map guide shows how to run that tool yourself.
Some income doesn't count at all, including earned income of minors who aren't applicants, foster care payments, the earned income tax credit, student financial aid, SNAP benefits, and one-time income such as gifts.
2. Citizenship or Qualified Alien Status
Applicants must be U.S. citizens, U.S. non-citizen nationals, or qualified aliens under 8 U.S.C. 1641. HB-1-3555 Chapter 8 lists qualified aliens, including lawful permanent residents, asylees, refugees, and people paroled into the U.S. for at least one year.
3. Primary Residence, Occupied Within 60 Days
No investment properties. HB-1-3555 requires that you move in within 60 days after signing the security instruments and keep it as your principal residence for the life of the loan.
Active-duty military may be eligible. If active duty keeps you from living in the home, USDA treats the occupancy requirement as met when your family keeps living there as their principal residence. That matters for Fort Cavazos families looking outside Killeen.
4. Unable to Get Traditional Conventional Credit
USDA is meant for buyers who can't readily get a conventional loan without private mortgage insurance. HB-1-3555 defines "traditional conventional credit" as having all of these at once:
- Non-retirement liquid assets of at least 20% of the purchase price for a down payment
- Enough on top of that to pay all closing costs
- Ratios no higher than 28% housing and 36% total debt with that 20% down
- Qualifying credit for a 30-year fixed conventional loan without PMI
Meet every one, and you're ineligible for USDA. Retirement accounts and land you own don't count as liquid assets here.
5. Owning Another Home
Current homeowners can qualify, but only if all of these are true (7 CFR 3555.151(e) and HB-1-3555 Chapter 8):
- You won't be responsible for another USDA guaranteed or direct loan by the time this one closes
- Your current home no longer meets your needs, for example because of a job relocation, a growing family, or a divorce where your ex-spouse keeps the house
- You'll live in the new home as your primary residence
- You're financially qualified to carry both homes
- You keep no more than one other single-family home
6. Legal Capacity
You must have the legal capacity to take on the loan and apply as an individual, not as a trust or company. People suspended or debarred from federal programs aren't eligible.
Credit Requirements Under HB-1-3555
USDA Rural Development states that "the program has no credit score requirements," but you must show a willingness and ability to manage debt. Lenders may add their own criteria on top of USDA's.
The review depends on what USDA's automated system, GUS, returns:
- GUS "Accept": no credit score validation or separate credit exception is required.
- GUS "Refer" or manual underwriting: at least one applicant needs a validated score (two tradelines open at least 12 months), and significant derogatory credit needs a documented exception.
HB-1-3555 Chapter 10 and 7 CFR 3555.151(i) list what counts as significant derogatory credit on those files:
- A foreclosure completed in the last 36 months
- A Chapter 7 bankruptcy discharged in the last 36 months
- One rent or mortgage payment 30 or more days late in the last 12 months
- A previous USDA loan that caused a loss to the government within the last seven years
A Chapter 13 plan in progress can work if all payments have been on time and the court or trustee approves the new mortgage.
Some items make you ineligible until they're resolved:
- Delinquent non-tax federal debt
- An outstanding federal judgment (other than one from the U.S. Tax Court)
- A CAIVRS result other than "A" (USDA says an "A" response is the only acceptable result)
- Delinquent court-ordered child support, unless it's brought current, paid, released, or (when not subject to administrative offset) under an approved repayment agreement with three timely payments
- Delinquent federal taxes without an IRS repayment plan showing at least three timely payments, or failing to file required returns
Collections: USDA doesn't require medical collections or charge-offs to be paid. If non-medical collections total more than $2,000, they must be paid off, put on a documented repayment plan, or counted as a monthly payment of 5% of the balance.
No credit score? USDA accepts non-traditional credit, such as rent, utility, insurance, and cell phone payment histories: two references if one is 12 months of rent, or three without rent history.
Debt-to-Income Ratios as USDA States Them
USDA uses two ratios, both measured against repayment income (7 CFR 3555.151(h) and HB-1-3555 Chapter 11):
| Ratio | USDA Standard | What's Included |
|---|---|---|
| PITI (housing) ratio | 29% | Principal and interest, property taxes, homeowners insurance, the monthly amount of the first year's annual fee, HOA dues, and other real estate assessments |
| Total debt ratio | 41% | The housing payment plus recurring monthly debts like car loans, credit cards, student loans, and court-ordered payments |
When the ratios can go higher. A GUS "Accept" doesn't need a ratio waiver. For "Refer" and manually underwritten purchase files, USDA can approve a waiver up to 32% housing and 44% total debt when every applicant has a validated score of 680 or higher and the file shows at least one compensating factor:
- Savings left after closing equal to at least three months of the new house payment
- Two years of continuous employment with your current primary employer
- A new payment no more than $100 or 5% (whichever is less) above what you've paid for housing over the last 12 months
- An energy-efficient home that meets the International Energy Conservation Code
Texas-specific: your spouse's debts count. Texas is a community property state, so USDA requires lenders to include a non-purchasing spouse's debts in the ratios, using a separate credit report. If your spouse isn't on the loan but has a car payment, plan on it showing up in your numbers.
Student loans count at the reported payment, or 0.5% of the balance when the payment shows as zero, including deferred loans. Utilities, child care, commuting costs, and medical collections aren't counted as debts. Files built on non-traditional credit aren't eligible for ratio waivers.
My how much house can I afford in Texas guide shows how ratios turn into a price range.
Property Requirements
Location: An Eligible Rural Area
Rural Development only guarantees loans in areas it designates as rural under the Housing Act of 1949 (7 CFR 3555.201). Eligibility is tied to the exact address. The lookup itself is in my USDA map guide.
The Site
- Typical size for the area. USDA sets no acreage limit, but the lot must be typical for the area.
- No income-producing land or buildings, such as property used mainly for farming or a business.
- Road access from a hard-surfaced or all-weather street, road, or driveway, with an enforceable maintenance arrangement.
- Adequate water and wastewater. Private wells and septic systems can work. USDA's flyer lists a safe water test for private wells.
The Home
- Existing homes must be structurally sound, functionally adequate, in good repair (or repaired with loan funds), and have safe electrical, heating, plumbing, water, and wastewater systems, inspected under HUD's one-to-four unit standards (7 CFR 3555.202).
- New construction must meet or exceed the International Energy Conservation Code in effect when it was built, with the required inspections and builder warranty.
- Condos must be in projects that meet HUD, Fannie Mae, VA, or Freddie Mac standards. PUDs, modular homes, and some manufactured homes are eligible.
- Manufactured homes need a HUD certification label and data plate, a permanent foundation, at least 400 square feet for a new unit, and must be taxed as real estate and secured together with the land. An existing manufactured home that's been moved from another site isn't eligible.
Loan Terms, Fees, and What You Can Finance
- Term: 30-year fixed rate only. Adjustable-rate, balloon, and prepayment-penalty loans aren't allowed (7 CFR 3555.104). Your rate is set by the lender, not USDA.
- Upfront guarantee fee: 1.00% of the loan for fiscal year 2027 (October 1, 2026 through September 30, 2027), per USDA's FY 2027 notice. It can be financed.
- Annual fee: 0.35% of the average scheduled unpaid principal balance. The lender can pass it on to you, and USDA counts the monthly amount in your housing payment.
- Maximum loan: the lesser of the appraised value plus the upfront fee, or the price plus eligible costs (7 CFR 3555.103).
- Closing costs: reasonable and customary costs can be included in the loan up to those limits. Costs the seller pays can't also be financed.
- Seller contributions: a seller or other interested party can contribute up to 6% of the sales price toward your financing costs, closing costs, and escrows (7 CFR 3555.102(h)).
Hypothetical example, not a quote: on a $250,000 loan amount, a 1.00% upfront fee is $2,500. A 0.35% annual fee on that balance works out to roughly $875 a year, or about $73 a month, early in the loan, and it shrinks as the balance goes down. Financing the upfront fee raises the loan amount, and the annual fee, slightly.
One timing note: USDA said FY 2027 would start with a funding gap of about a week, and announced funds available on October 6, 2026. If funding runs short later in a year, federal rules let USDA limit guaranteed loans to first-time buyers and veterans.
Want down payment help on top? TDHCA's My First Texas Home program works with USDA loans for eligible first-time buyers, and Fairway is a participating lender for both TDHCA and TSAHC programs.
A Texas Example: Checking Both Halves Early
A couple relocating to rural North Texas wanted to explore a USDA loan. We checked the property and the household side by side: each address against USDA's eligibility map, and their household income against the limit for that county. Several of the homes they liked were older, so we also talked through what the home had to meet, and whether a purchase with repairs folded into the loan made more sense than holding out for a move-in-ready house.
Illustrative scenario, not an actual client transaction. USDA eligibility depends on the specific program, household circumstances, and property.
Your USDA Document Checklist
- Two years of income history for every adult in the household, not just the borrowers
- Pay stubs, W-2s, tax returns, and any benefit award letters
- Asset statements for checking, savings, and investment accounts
- ID and citizenship or immigration documents
- 12 months of rent history and child care or dependent details
If USDA doesn't fit, compare FHA loans or, for eligible veterans and service members, VA loans.
Frequently Asked Questions
What are the USDA loan requirements in Texas?
For a USDA Guaranteed loan, your household's adjusted income must be at or below the county's moderate-income limit, you must be a U.S. citizen, U.S. non-citizen national, or qualified alien, and you must live in the home as your primary residence. You also need acceptable credit and debt ratios, must be unable to get traditional conventional credit, and the home must be in an eligible rural area and meet USDA property standards.
Is there a minimum credit score for a USDA loan?
USDA Rural Development says the program has no credit score requirement, but you must show a willingness and ability to manage debt. Lenders may set their own minimums, and files that need manual underwriting require a validated score, with 680 or higher needed for a debt ratio waiver.
What debt-to-income ratio does USDA allow?
USDA's standards are 29% of repayment income for the housing payment and 41% for total monthly debt. Loans with a GUS Accept do not need a ratio waiver, and manually underwritten purchase loans can go up to 32% and 44% with a 680 or higher score and an eligible compensating factor.
How much is the USDA guarantee fee for fiscal year 2027?
For USDA's fiscal year 2027, which runs from October 1, 2026 through September 30, 2027, the upfront guarantee fee is 1.00% of the loan and the annual fee is 0.35%. The upfront fee can be financed into the loan, and the monthly amount of the annual fee is counted in your housing payment.
Can I get a USDA loan if I already own a home?
Possibly. USDA allows it when your current home no longer meets your needs, you will not be responsible for another USDA loan by closing, you will live in the new home as your primary residence, you can qualify for both homes, and you keep no more than one other single-family home.
Let's Check Your Household and the House Together
Send me the address and a rough picture of your household, and I'll walk through the income limit, the ratios, and the property rules with you before you make an offer.
Get Pre-Approved | Book a Free Consultation
Related Guides
- USDA Home Loan Texas Map: Property and Income Eligibility
- USDA Loans in Texas
- FHA Loan Requirements in Texas
- My First Texas Home Down Payment Assistance
- How Much House Can I Afford in Texas?
- Closing Costs in Texas
Sources
- USDA Rural Development: Single Family Housing Guaranteed Loan Program and program flyer
- 7 CFR Part 3555 (3555.10, 3555.102, 3555.103, 3555.104, 3555.151, 3555.152, 3555.201, 3555.202)
- HB-1-3555 Chapter 8, Applicant Characteristics, Chapter 10, Credit Analysis, and Chapter 11, Ratio Analysis
- USDA Income and Property Eligibility Site
- USDA FY 2027 Conditional Commitment Notice and FY 2027 funds announcement
Taylor Ring, NMLS #2809683 | Fairway Independent Mortgage Corporation, NMLS #2289 | The Wood Group of Fairway, 127 Lake Rd Ste 300, Belton, TX 76513 | Equal Housing Opportunity. This is not a commitment to lend. All loans are subject to credit approval, property approval, and program guidelines, and approval, rates, and program availability are not guaranteed. USDA income limits, fees, and eligible areas can change. The fee example is hypothetical and is not a loan estimate. Not affiliated with or endorsed by USDA Rural Development, TDHCA, TSAHC, or any government agency.