What Are USDA Eligibility Maps and How Do You Use Them?

Here’s How to Find USDA-Eligible Homes

If you're looking for different loan options to help you buy a home with little or no down payment, a USDA loan could be worth exploring.

Because not every home qualifies, you'll need to make sure the area you want to live in is in a USDA-eligible zone. Fortunately, the U.S. Department of Agriculture (USDA) offers an easy-to-use online eligibility map so you can pinpoint which communities qualify.

Let's take a closer look at how to use USDA eligibility maps and narrow your home search to qualifying areas.

What Is the USDA Eligibility Map?

The USDA eligibility map is an interactive tool that shows which homes in rural areas or small towns qualify for USDA financing, one of the key requirements for USDA loan approval.

This home loan program was created to make homeownership more affordable for people in rural areas and help strengthen and support rural communities. Because of that, they only offer to borrowers who plan to buy a home in a USDA-approved zone.

How the USDA Defines Rural Areas

You may think "rural areas" simply mean farmland or countryside, but that's not exactly how the USDA defines them. When determining what qualifies as rural, the USDA looks at population data from the U.S. Census Bureau, as well as other factors such as how quickly an area is growing, the local labor market, and how close it is to a major metropolitan area.

Because this information can change over time, USDA-approved zones can shift. That's why it's always a good idea to check the USDA Eligibility Map to make sure the area you're interested in still qualifies. In some cases, areas can still qualify if they were once considered rural but lost that status in a previous U.S. Census.

How To Use the USDA Eligibility Map

Using the USDA Eligibility Map is pretty simple. Here's how it works:

• Head to the USDA's official website and open the map.
• Enter a property address you're interested in and click "GO!"
• The map will zoom in and instantly show whether the home is in a USDA-approved zone.

USDA Eligibility Map Navigation Tips and Features

If you don't have a specific home picked out yet, you can simply put in a zip code or explore the map to identify qualifying neighborhoods and towns.

On the map, areas shaded in yellow don't qualify for USDA loans, while white areas usually do.

USDA Eligibility Map Updates

The USDA reviews its eligibility maps regularly to keep up with the latest population and housing trends. Major updates often follow the U.S. Census, which is released every ten years, with minor updates happening ore often.That's why it's important to review the USDA Eligibility Map periodically to make sure the home you're considering is still located in an eligible zone.

USDA Loan Eligibility

Qualifying for a USDA loan involves more than just picking a home in an approved area.Since this loan program helps make homeownership more attainable for low- to moderate-income borrowers through competitive rates and no down payment requirement, you'll need to meet USDA loan eligibility and qualification requirements before starting the application process with a lender.

USDA requirements include:

• Citizenship: You must have U.S. citizenship or be a permanent resident.
• Primary residence: You must use the home you purchase for your full-time residence. In other words, the home can't be used to purchase an income-generating property like a rental or other investment property.
• Income limits: The USDA sets income limits for all applicants, which are based on everyone living in your household. Depending on where you live, your income typically can't exceed 115% of the area's median income.
• Inadequate housing (USDA Direct Loans only): If you're applying for the USDA Direct Loan Program, you must currently lack "decent, safe, and sanitary" housing. Keep in mind, this requirement doesn't apply to the more common loan type, the USDA Guaranteed Loan option.
• Lack of other loan options (USDA Direct Loans only): You'll need to prove that you were unable to qualify for other mortgages with reasonable terms from another lender before applying.

USDA Loan Property Requirements

Before a lender will approve a USDA loan, the property itself must also meet a few extra key requirements, including:

• Property usage: Although the USDA doesn't limit how large the property can be, you can't use the loan to buy land that generates income, such as through farming or running a business.
• Condition: The home you choose must be safe, clean, and in good condition. During the process, a USDA appraisal will check that the home's value and condition meet program requirements and that there are no major issues like leaks or electrical problems.
• Home type: You can use a USDA loan to buy a single-family home, an approved condo or PUD, or certain manufactured or modular homes that meet the USDA's property standards.

USDA Loan Financial Requirements

Once you know you and the area you want to live in meet all of the USDA's lending requirements and qualifications, it's time to take a closer look at your finances.

When you submit a USDA loan application, lenders review your credit score, income, debt, and overall financial situation to make sure you can comfortably manage monthly mortgage payments. This also helps them determine what interest rate and loan amount you may qualify for. Before you apply, you can prequalify for a USDA loan, which gives you an idea of your approval odds and potential rate.

At Freedom Mortgage, financial requirements include:

• Credit score: You usually need acredit score of at least 640 to qualify for a USDA loan. However, at Freedom Mortgage, it's possible to qualify with a score as low as 620.
• Debt-to-income (DTI) ratio: Your monthly debts, including a potential mortgage payment, should generally be no more than 43% of your income. However, if you have strong credit and savings, you might still get approved with a slightly higher DTI.
• Savings: While you can qualify for a USDA loan without a down payment, you'll still need to save for closing costs and fees. A USDA loan includes a one-time guarantee fee, typically around 1% of your loan amount, and an annual fee of 0.35% of the remaining mortgage balance. You'll also need to set aside savings for closing costs, which usually include expenses like lender and title fees, property taxes, and homeowners insurance paid at the t ime of closing.

Final Thoughts: USDA Eligibility Maps for Homebuyers

If you're ready to take the next step toward homeownership, a USDA loan could be a great option, especially if you have your heart set on a place in a rural or small suburban area. The USDA Eligibility Map makes it easy to see which neighborhoods qualify before you apply. Once you find an eligible property and check your finances, you can move forward with applying for a USDA loan and start your journey to owning a home.