USDA loans have property eligibility requirements rooted in the program's mission to boost rural communities nationwide. For a property to be eligible for a USDA loan, it must meet the basic eligibility requirements set forth by the USDA, which cover rural area designation, occupancy, and the physical condition of the home.
The good news is that most of the country is in what the USDA considers a qualified rural area. But it's important for prospective buyers to check a home's eligibility status before getting too far into the process.
You can use this interactive map to help determine if a home currently meets the USDA's property eligibility requirements. Areas in red are not currently eligible for a USDA-backed loan.
It’s not surprising that you need a USDA property eligibility map to figure out if a property can qualify as rural. The Department of Agriculture has mapped every nook and cranny in every state to show which properties are rural and which are not.
It turns out that about 74% of the country’s land area is rural, and qualified rural properties sometimes turn up in surprising places. Before getting too far into the buying and financing process, it’s important to check properties of interest to be certain they can qualify for rural financing with no money down and other benefits.
We all have a way to define “rural” real estate, and so does the government. In fact, the government has several definitions.
For a home to meet the USDA's rural definition, it must be in an area that's located outside a town or city and not associated with an urban area
The USDA's guidelines on the definition of a qualified “rural” area include:
The USDA wants the home it finances to meet certain standards. This form of consumer protection is designed to ensure that borrowers get safe and habitable housing.
First and foremost, the home must serve as your primary residence. Such homes can include:
USDA loans cannot be used for investment properties. Farms, rental properties, vacation homes, and other income-producing properties are not eligible for USDA loans. However, a property with acreage, barns, silos, and so forth that are no longer in commercial use may still qualify.
More: Owning more than one property with a USDA loan.
The USDA requires the home to be structurally sound, functionally adequate, and in good repair. To verify the home is in good repair, a qualified appraiser will inspect and certify that the home meets USDA standards.
The USDA uses standards found in HUD's Single Family Housing Policy Handbook. This document runs nearly 1,900 pages. A few of its standards include:
USDA loans have an appraisal process that differs from other types of financing.
An appraiser reviews a USDA property and checks to see that the property meets all required standards of condition in addition to determining the property’s fair market value. However, keep in mind that appraisals are not as in-depth as a home inspection.
Ensuring a property meets USDA eligibility requirements is a critical step in securing a USDA loan. Proper documentation helps verify that the home is located in an eligible rural area, meets safety and livability standards, and complies with all legal and financial requirements. Lenders rely on this information to confirm that the property aligns with USDA guidelines, protecting both the borrower and the loan program.
The documentation process is structured to assess three key areas: location eligibility, property condition, and legal ownership. Borrowers and sellers should be prepared to provide detailed records to ensure a smooth approval process.
The required documents typically include:
Borrowers should be aware that these documents are typically required at various stages of the loan approval process. Address verification and initial property eligibility checks happen early, while the appraisal and title search occur later in underwriting. Some lenders may request additional paperwork based on specific property characteristics or state regulations.
Common challenges during this process include properties with unclear boundary lines, missing title records, or issues flagged during appraisal. Homes in flood zones or those needing significant repairs may require additional steps to meet USDA standards. Borrowers can avoid unnecessary delays by reviewing property records in advance, addressing any zoning or legal concerns, and working with an experienced USDA lender to navigate the process smoothly.
The USDA's credit and income requirements are equally important as the USDA's property requirements. While the USDA does not impose a minimum credit score, the program does enact income limits, adjusted for family size, to ensure all loans help the low- to middle-income families for which it was designed.
USDA income limits count toward all adult household members but vary by location and household size. The base income limits are:
More: Determine the income limit in your county using our USDA income limit calculator.
While the USDA property eligibility map shows a general idea of qualified locations, it's best to consult a USDA lender to ensure the location is, in fact, eligible. Do this because what the USDA considers eligible can change as laws and populations evolve.
