USDA Loan Qualifications in Texas – Eligibility and Requirements

The USDA home loan program can help rural homebuyers in Texas purchase a home with little to no down payment. But meeting the USDA loan eligibility rules is key to getting approved. Let’s look at the key USDA mortgage qualifications you’ll need in Texas.

Overview of USDA Loans

USDA home loans are backed by the US Department of Agriculture, They help low-to-moderate income buyers purchase homes in eligible rural locations,

Key features include

  • 100% financing available – no down payment required
  • Fixed interest rates
  • Up to 33 year loan term
  • Relaxed credit requirements
  • Low mortgage insurance costs

USDA loans offer significant advantages for qualifying borrowers. But you must meet all eligibility standards to get approved.

USDA Loan Service Area in Texas

USDA loans can only be used in designated rural areas. The USDA eligibility map tool lets you enter any Texas address to see if it falls within the service area.

Generally, USDA loans are available in smaller towns and counties not near major metro areas. Places like Abilene, Midland, Lubbock, Tyler, and Wichita Falls are often eligible.

Parts of suburban counties adjacent to big Texas cities may also qualify. But central urban areas are typically excluded.

Texas USDA Income Limits

To qualify for a USDA loan, your household income must fall under the income caps for your area. Here are the latest Texas income limits by region:

Central Texas

(Includes Austin, Waco, Killeen, College Station)

  • 1 person: $52,200
  • 2 people: $59,600
  • 3 people: $67,000
  • 4 people: $74,350

East Texas

(Includes Longview, Lufkin, Nacogdoches, Tyler)

  • 1 person: $44,800
  • 2 people: $51,200
  • 3 people: $57,600
  • 4 people: $64,000

North Texas

(Includes Wichita Falls, Abilene, San Angelo)

  • 1 person: $44,800
  • 2 people: $51,200
  • 3 people: $57,600
  • 4 people: $64,000

Panhandle Texas

(Includes Amarillo, Lubbock)

  • 1 person: $52,200
  • 2 people: $59,600
  • 3 people: $67,000
  • 4 people: $74,350

South Texas

(Includes Corpus Christi, Victoria, Brownsville)

  • 1 person: $44,800
  • 2 people: $51,200
  • 3 people: $57,600
  • 4 people: $64,000

West Texas

(Includes Midland, Odessa, Big Spring)

  • 1 person: $52,200
  • 2 people: $59,600
  • 3 people: $67,000
  • 4 people: $74,350

Your total household income must be below the limit for your family size in your region. All income sources are included – wages, self-employment, social security, pensions, etc.

Texas USDA Home Price Limits

In addition to income caps, the USDA program has limits on how much you can borrow. Here are the 2023 Texas USDA mortgage limits:

  • 1-unit homes: $386,900
  • 2-unit homes: $494,950
  • 3-unit homes: $605,525
  • 4-unit homes: $730,200

The home purchase price must align with these limits based on the property type. You can utilize 100% financing up to these amounts.

Texas USDA Credit Requirements

USDA loans are available to borrowers with lower credit scores, compared to conventional mortgages. Here are the minimum credit standards:

  • Credit scores as low as 640 qualify with automated underwriting
  • Manual underwriting allows scores between 600 and 639
  • Must have a steady 24-month job history
  • Stable income to cover the mortgage payment
  • Debt-to-income ratio below 41% in most cases

While credit requirements are flexible, you still must demonstrate an ability and willingness to repay the mortgage. Major issues like foreclosure or bankruptcy in the past 3 years disqualify you.

Texas USDA Asset Limits

The USDA program does have limits on how much money you can have in assets (cash, savings, investments, etc.). Here are the current Texas USDA asset limits:

  • 1-2 person household: $40,000
  • 3+ person household: $60,000

Retirement accounts don’t count toward the total. If your assets exceed these amounts, you’ll likely have to pay a portion as a down payment. Still much lower than conventional loan requirements.

Other Texas USDA Eligibility Factors

Beyond income, home value, credit, and assets, other requirements include:

  • Property must be located in an eligible rural area
  • Home must be primary residence – no vacation properties
  • Applicants must be U.S. citizens, permanent residents, or qualified non-citizens
  • Sufficient cash reserves required – often 1 month’s mortgage payment
  • Property must be 1-unit single family home, townhome, or condo

Meeting all these eligibility guidelines qualifies you for a Texas USDA loan with no money down and relaxed approval standards. Start with the USDA eligibility tool linked below to see if you pre-qualify.

Resources for Texas USDA Loans

The USDA mortgage program opens doors to affordable home financing for credit-challenged buyers in rural Texas. Review the income, home value, and credit requirements to see if you may qualify.

USDA Mortgages Compared to Other Mortgages

USDA mortgages usually offer the lowest rates on the market. There’s no down payment required, making them an ideal option for those who lack savings. However, rates on USDA loans will depend on your financial situation. To get the best rate, you will need ahigh credit score coupled with a sizeable down payment. The more financially strong you appear to your lender, the lower your rate will be. 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.

How Does A USDA Loan Work In Texas?

FAQ

What is the income limit for a USDA loan in Texas?

Eligibility Requirements – Texas The average household income limits for a USDA home loan in Texas is $110,650. The household limits also vary according to how many occupants in the home. With 5 or more occupants the limit can be as high as $177,350.

What credit score do you need for a USDA loan in Texas?

Automatic GUS approval requires you to have a credit score of 640 or higher with no outstanding federal judgments or significant delinquencies. Even if you don’t have a 640 credit score, it’s still possible to apply and be approved for a USDA loan.

Who is eligible for a USDA construction loan in Texas?

In order to be approved for a USDA loan, you and the property must qualify. The property must be located in a rural area. This means the area must have a population of less than 20,000. In order to meet the income qualifications, you must make less than 15% above the average income for the area.

Is FHA better than USDA?

USDA loans allow no down payment and have cheap mortgage insurance, but you have to buy in a “rural” area and meet income limits. FHA loans are more flexible about income, credit, and location, but they can have higher costs. Luckily, there’s an easy way to choose. Just ask your lender about USDA loans and FHA loans.

Do you qualify for a USDA loan in Texas?

USDA stands for “United States Department of Agriculture.” As the name suggests, they’re specifically involved with financing housing for families in rural areas. See if your household income qualifies for a USDA loan here. Or, speak to an experienced Texas mortgage adviser to determine if you qualify for all aspects of a USDA loan.

How do I qualify for a USDA loan?

– The home you intend to purchase must be located in an eligible rural area as defined by the USDA. 2.**Residency and Citizenship**: – You must be a **U.S. citizen**, a **permanent resident**, or an

How does the USDA finance a home loan?

The USDA provides funding for direct loans, which have favorable terms like low interest rates (as low as 1% with payment assistance) and long repayment periods (up to 38 years for eligible applicants). Income, creditworthiness, and the property’s location in an eligible rural area all affect eligibility.

What credit score do you need for a USDA loan?

Lenders usually require a credit score between 620 and 640 for USDA loans. The USDA itself does not set a minimum credit score. They leave that decision to the mortgage lenders that actually serve the loans. The USDA loan program tends to have a higher credit score requirement than some other government-backed mortgage programs.

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