USDA Loan Requirements & Guidelines for 0% Down Mortgages

What are the Core Requirements for a USDA Loan?

Longing for a life rooted in rural homeownership? Discovering the core requirements for a USDA Loan is your first step. USDA Loans, backed by the United States Department of Agriculture, require specific criteria for eligibility. To qualify, applicants must meet income limits, reside in designated rural areas, and demonstrate a stable credit history. These loans aim to support home ownership in rural communities by offering favorable terms and low-interest rates.

Borrower Requirements

  • 0% down payment
  • Property must be in an eligible location
  • Must be single-family, owner-occupied home
  • Income must be below USDA-set limits – $110,650 for Michigan households with 4 persons or less
  • Minimum FICO score of 620
  • Property cannot be a working farm
  • The property’s appraisal must meet USDA standards
  • Maximum debt-to-income ratio of 41%
  • Borrower must be US citizen or non-citizen national

See the USDA property eligibility map
Eligible rural homes don’t necessarily have to be in the middle of nowhere, hours away from a city and civilization to qualify for a USDA Loan. As long as the property you’re looking to purchase isn’t in a major metropolitan area, you might still be able to qualify. The USDA’s website offers a handy tool that will allow you to see if your property is eligible for USDA home financing.


USDA Appraisal Requirements for Property Conditions

USDA Loans mandate thorough property appraisals to ensure homes meet safety and livability standards. Appraisers assess structural integrity, mechanical systems, and overall property condition. The focus is on habitability, safety, and compliance with local building codes. Any issues identified during the appraisal must be addressed before loan approval. This stringent appraisal process safeguards both the borrower and the USDA.

General Requirements

  • Land value is not more than 30 of the home’s value
  • Functioning (and safe) utilities, plumbing, electrical, sewer/septic, and HVAC
  • No income-producing structures (barns, greenhouses, etc.)
  • No termite or wood damage
  • Property is up-to-code


What Disqualifies a Home from USDA Financing?

Applicants for USDA Loans may be disqualified due to factors like exceeding income limits, inadequate credit history, or residing in a non-eligible area. Other disqualifying factors include unresolved federal debts, insufficient repayment ability, and failure to meet the property condition standards mandated by the USDA.


Home Loan Alternatives to USDA Rural Development

  • VA: Exclusive to military service members, these loans offer home financing with a flashy 0% down payment option, making homeownership more accessible for eligible veterans and active-duty personnel.
  • FHA: These loans feature a low 3.5% down payment requirement. Backed by the Federal Housing Administration, FHA loans assist diverse borrowers in achieving affordable home purchases.
  • Repair Loans: Feeling a fixer-upper? There are some mortgage programs that issue loans to finance both the purchase and renovation costs of your home while highlighting lower down payments to streamline the process.
  • Conventional: Keeping it conventional will land you at 3% down.


Get a USDA Loan in Michigan

Ready to start heading down your path to homeownership in West Michigan? Take the first step today with Treadstone, your RD expert lender. Get pre-approved now for a seamless home buying journey!



Is there a difference between USDA vs RD loans?
There is no difference between USDA and RD Loans. USDA Loans are commonly referred to as RD (Rural Development) Loans — both terms are used interchangeably to describe the same government-backed home loan program for rural areas.

What is the income limit for USDA in Michigan?
For households in Michigan with 1-4 people, the 2023 limit is $110,650. For households with 5-8 people, the 2023 limit is $182,550.

How long is a USDA appraisal good for?
Appraisals for homes using a Rural Development Loan are good for 150 days.

What documents do I need for a USDA loan?
To secure a USDA Loan, you will need the following documents:

  • Two most recent bank statements or asset statements for all accounts
  • Two year’s tax returns
  • Last four week’s pay stubs
  • Written explanations of any gaps of employment of 30 days or more in the last 24 months
  • Verification of Identity
  • If applicable, 12 months of payment history for received alimony or child support


Subject to credit approval, not all borrowers may qualify. All information is for educational and illustrative purposes only. Not a commitment to lend, and not financial advice. Not affiliated with or endorsed by any government institution. Please contact us for eligibility and quotes.

Rural Development Loans require specific criteria for eligibility