Texas USDA Loan
Texas is a paradise for nature lovers. If you’re looking to get a Texas USDA loan for a rural area – or even just outside the city – you can get a great rate with this loan.
USDA mortgage loans are boosting development in rural areas and helping families with low or moderate income purchase homes.
The U.S. Department of Agriculture backs USDA loans. They are designed to promote rural living and development.
If you want to live in a rural area in Texas, you may be able to qualify for a Texas USDA mortgage loan.
What is a USDA Mortgage Loan?
In order to increase rural development, the USDA works with lenders to offer these guaranteed loans.
This guarantee allows lenders to offer USDA loans with excellent low rates and no money down. Low-income borrowers in rural areas are able to purchase homes because of USDA mortgage loans.
How Do I Qualify?
In order to be approved for a USDA loan, you and the property must qualify.
The property must be located in a USDA-eligible area. Eligibility is set by USDA’s own map rather than by a single population figure, and areas with populations as high as 35,000 can qualify — including a number of communities within commuting distance of Houston. Because a street on one side of a road can be eligible when the other side is not, the only reliable way to know is to check the specific address.
To meet the income qualifications, your total household income must be at or below 115% of the area median income for your county and household size. USDA counts the income of every adult living in the home, not only the people on the loan, and then allows deductions that often bring the qualifying figure well below gross pay.
You must also be able to demonstrate stable income and employment. USDA itself publishes no minimum credit score; most lenders look for a 640 to run a file through the streamlined documentation path, and lower scores can still be approved with a fuller review of the credit history. USDA’s benchmark debt-to-income ratios are 29% for the housing payment and 41% for total debt — benchmarks rather than ceilings, since the automated underwriting system approves above them regularly when reserves, credit depth or job stability support it.
How We Got Money Back For The Buyer On A USDA Loan In Houston, Texas
Reef Merhi, Mortgage Expert Shares How He Did It In 2025
The Numbers:
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Original Home Price: $240,000
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Earnest Money Deposit: $2,400
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Estimated Closing Costs: $6,000
How We Did This USDA Loan
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Increase the Offer Price:
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Raised offer from $240,000 to $248,000
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Purpose: So seller can cover closing costs
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Seller Contributes $8,000:
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Seller agrees to pay $8,000 toward buyer’s costs
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This covers:
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$6,000 in actual closing costs
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Remaining $2,000 reimburses the buyer’s earnest money deposit
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Outcome at Closing:
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Buyer is reimbursed $2,000 of the $2,400 earnest money already paid
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Only ends up paying $400 total out-of-pocket
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| Step by Step | Amount |
|---|---|
| Home Price (after increase) | $248,000 |
| Seller Pays (toward costs) | $8,000 |
| Actual Closing Costs | -$6,000 |
| Earnest money reimbursed | $2,000 |
| Buyer’s Initial Deposit | $2,400 |
| Earnest money returned to buyer | $2,000 |
| Final Out-of-Pocket for Buyer | $400 |
USDA Loan Eligibility Calculator
Qualifying for a USDA loan in Houston, Texas does require that you meet specific requirments to be eligible. Try out our calculator below and then get in touch with us to talk with a live loan officer to see how you can become eligible for the low rates a USDA loan can offer.
USDA Loan Eligibility Checker
📍 Check your property's USDA eligibility on the official map Start ApplicationUSDA Mortgage Loans and
How They Work
Rural development loans are also known as Section 502 loans.
The government created USDA loans in the 1990s to make it easier for low-income families in rural areas to become homeowners.
This type of loan is available for many borrowers because 97% of the country is classified as rural.
If you want to live in a rural area, and you meet the income requirements, a USDA loan may be the best option for you.
USDA mortgage loans are characterized by Low rates and 100% financing.
There’s no prepayment penalty and no down payment required, but you will be locked into a fixed rate if you take out a USDA mortgage loan. No ARM mortgages are available through the USDA.
USDA loans do not carry private mortgage insurance. In its place there is a 1% upfront guarantee fee, which can be financed into the loan, and an annual fee of 0.35% of the average scheduled balance, collected monthly. On most Texas purchases that annual fee costs less than FHA mortgage insurance would on the same house.
How to Qualify for a USDA
Mortgage Loan
To qualify for a USDA loan, you must be a United States citizen or permanent resident.
Your monthly payment must not exceed 29% of your monthly income. You must be able to verify steady income over the past 24 months, and you cannot have had any debt sent to collections within the past year.
If you want to be approved quickly and receive the most attention from lenders, it’s best to apply after you raise your credit score to at least 640.
USDA loans are designed to help people with the greatest need.
Those without safe and sanitary housing are prime candidates for USDA mortgage loans.
While you won’t be able to purchase a home in the city with this loan, some suburbs are considered rural by the USDA. You may be able to get a Houston USDA mortgage loan to purchase a home just outside of the city.
USDA Mortgages Compared to Other Mortgages
USDA mortgages are priced competitively with FHA, and there is no down payment required, which makes them a strong option for buyers who have not built up savings.
Rates still depend on your financial situation. The largest single factor is your credit score, along with the loan term, the length of your rate lock and whether you pay points.
What does not improve your rate here is making a down payment. This loan is designed to be written at 100% of the value, so a down payment is not the lever it would be on a conventional loan — if you have savings, they are usually better spent on closing costs and reserves.
Rates also vary by lender, so don’t be shy about shopping around. While many lenders don’t advertise USDA loans, most offer them.
Also, rates may vary by lender, so don’t be shy about shopping around. While many lenders don’t advertise USDA loans, most offer them.
USDA Mortgage Loans Pros and Cons
Pros:
- No down payment required
- Closing costs included in the loan
- Prepay without penalty
- Low interest rates
Cons:
- Only available in rural areas
- Private mortgage insurance required
- Limits on income and property type
USDA mortgage loans are a good choice for first-time and repeat home buyers who can’t secure financing through a conventional loan.
The USDA mortgage requirements for 2026 are flexible and accommodating for those with moderate income. If you don’t qualify for a conventional mortgage, you may be able to purchase your home with the help of a USDA mortgage loan.