The Texas USDA loan guide: buy with $0 down in an eligible area
USDA loans are the most overlooked zero-down program in the country, and Texas has more eligible ground than almost any state. They are not farm loans, and a household earning into six figures near Austin can still qualify. The eligible map also runs closer to Houston, Dallas, San Antonio, and Austin than most buyers expect. This Texas guide covers who qualifies, what the loan costs, and how a purchase in an eligible town closes, all on current USDA figures.
What is a USDA loan, and how does it work in Texas?
In Texas, a USDA loan is a zero-down mortgage that the U.S. Department of Agriculture guarantees through its Rural Development arm, the Section 502 Guaranteed program. A Texas lender writes the loan and USDA stands behind it, which is what lets a buyer in Kaufman or Hempstead finance the whole purchase without the monthly mortgage insurance a low-down conventional loan carries. The program was built to move home financing into the small towns and farm country that big banks skipped, and much of rural Texas still fits that description.
The word "agriculture" trips people up. You need no land, no livestock, and no tie to farming to use one. It is a plain home loan for a plain house in Elgin, Sealy, or Castroville, with the single condition that the address sits inside the USDA-eligible map.
Who qualifies for a USDA loan in Texas?
Three gates decide it, and you clear all three. The house has to sit in a USDA-eligible Texas area, which rules in the exurb rings around Houston, Dallas-Fort Worth, San Antonio, and Austin but rules out the metro cores. Your household income has to land under the county limit, $122,800 in most of Texas and higher in the Austin, Dallas, and Brazoria County tiers. The home also has to be your primary residence, not a rental or a weekend place on the coast. Past those, it is ordinary underwriting: income, credit, and debt.
There is no first-time-buyer rule, and prior Texas homeowners can use it too. USDA does ask that you not already own a suitable home within commuting distance of the new one, since the point is to help a Texas family become homeowners, not to add a second house near Fredericksburg or the coast.
What are the USDA income limits in Texas?
USDA caps household income at 115% of the county's area median, from $122,800 across most of Texas up to $153,550 near Austin, and it counts every adult who will live in the home, not only the people on the loan. Between those two poles sit $144,900 in Brazoria County on the Houston side, $139,300 in the Dallas metro, and $126,850 in Fort Worth-Arlington, all effective July 13, 2026 for a household of one to four (the five-to-eight figures run higher).
That 2026 bump matters, because many websites still show the old $119,850 figure from 2025, and some the even-older $112,450. At a statewide median household income near $78,476 (Census, 2024), most rural Texas households sit comfortably under the limit. A Texas family told a year ago it earned too much may clear the higher 2026 line now. Check your county on the USDA income eligibility tool, or see the metro tiers on our eligibility page.
How does USDA property eligibility work in Texas?
The home must fall inside the USDA-eligible map, which covers areas USDA considers rural in character. Roughly 95% of Texas land area qualifies. What is excluded is the built-up center of Houston, Dallas-Fort Worth, San Antonio, Austin, and El Paso; everything past the last ring of suburbs is largely inside the map.
The practical surprise is how close the eligible line runs to the metros. Waller and Hempstead sit about 50 miles northwest of downtown Houston; Kaufman and Farmersville ring the east side of Dallas-Fort Worth; Elgin, Lockhart, and Smithville catch the Austin overflow; Poteet, Castroville, and La Vernia hold the San Antonio fringe. The catch in Texas is speed, because fast-growing towns like Anna, Aubrey, and Taylor have been flipping off the map as they urbanize. The only reliable check is the exact address on the USDA property eligibility map, since a ZIP code can straddle the boundary.
What does a USDA loan cost in Texas?
A USDA loan carries no private mortgage insurance. In its place sit two guarantee fees. The upfront fee is 1.0% of the loan amount, charged once and usually rolled into the balance, so a buyer in Waller can finance it rather than bring cash at closing. The annual fee is 0.35% of the average balance, split across the monthly payments for the life of the loan. USDA set both on October 1, 2016, and neither has moved for 2026.
Against FHA, USDA comes out cheaper on both: FHA runs 1.75% upfront and about 0.55% a year on most low-down loans. Because that 1% upfront fee can be rolled in, a USDA loan can finance a hair above the appraised value, which is unusual and helps on a tight-budget purchase in a town like Farmersville. The USDA vs FHA page lays the numbers side by side.
What credit score and debt levels does USDA allow?
USDA sets no minimum credit score of its own. Its automated engine, GUS, clears files most reliably at 640, so that is the number to aim for whether you are buying in Lockhart or Hempstead. Under 640, the file shifts to manual underwriting, where an underwriter documents your credit history and any compensating factors by hand. Individual Texas lenders can add their own overlays on top of that.
On debt, the starting ratios are 29% of gross income toward the housing payment and 41% toward total debt, and GUS will approve higher when the file shows reserves or a long clean payment record. Deferred student loans, common for younger buyers around the Texas universities, are generally counted at 1% of the balance.
How does the USDA loan process work in Texas?
It follows the same arc as any Texas purchase: pre-approval, house hunting inside the eligible map, an accepted offer, appraisal, and underwriting. The one wrinkle comes at the end. Once your lender approves the file, it goes to the USDA Rural Development office in Temple for a final sign-off before the clear-to-close, which usually runs a few business days.
Start to finish, a USDA purchase in Texas generally closes in about 30 to 45 days. Your choice of lender is the biggest variable on that timeline. A team that runs Texas USDA files regularly keeps that final USDA review from becoming a delay, which is the kind of file we close often around the Houston, DFW, and San Antonio rings.
USDA vs FHA vs conventional: which fits a Texas buyer?
USDA wins on cost and down payment when you can use it, but the geography and income gates put it out of reach for a buyer set on central Austin or inside Loop 610. FHA ignores both the map and the income cap and reaches lower credit, though at a higher insurance cost, which is why it covers in-town Dallas and Houston buyers. Conventional rewards strong credit and lets a Texas buyer drop mortgage insurance once they reach 20% equity. The table sorts it out.
| Factor | USDA | FHA | Conventional |
|---|---|---|---|
| Down payment | $0 | 3.5% | As low as 3% |
| Location limit | Eligible areas only | None | None |
| Income cap | 115% of area median | None | None |
| Upfront fee | 1.0% guarantee fee | 1.75% UFMIP | None |
| Ongoing insurance | 0.35% annual | ~0.55% annual | PMI, cancellable at 20% equity |
| Loan limit | None (repayment-based) | County FHA limits | $832,750 in most counties (2026) |
Fee figures are program fees, not interest rates or APR. USDA fees verified against USDA Rural Development; FHA and conforming figures against FHA and FHFA, current as of August 2026 and subject to change.
Common USDA myths that cost Texas buyers
Three beliefs disqualify people who actually qualify. The first is "USDA is only for farms," which sends buyers to pricier loans for homes near Waller, Kaufman, or Castroville that were eligible all along. The second is "we make too much," usually based on the pre-2026 income limits or on counting only the borrower instead of the whole household. The third is trusting a town's status from a year ago in a corridor like north of Dallas or around Taylor, where the map is moving fast. All three are worth a five-minute check before you rule USDA out.
Frequently asked questions
How much is the USDA guarantee fee in Texas?
The USDA guarantee fee has two parts: a one-time upfront fee of 1.0% of the loan amount, which a Texas buyer can roll into the balance, and an annual fee of 0.35% of the remaining balance, paid monthly. USDA set both on October 1, 2016, and they hold for 2026. Pages quoting a 3.5% upfront fee cite the statutory ceiling, not what buyers in towns like Kaufman or Elgin actually pay.
How long does a USDA loan take to close in Texas?
A USDA purchase in Texas usually closes in about 30 to 45 days, on par with other loan types. The one extra step is a final review by the USDA Rural Development office after your lender approves the file, which typically takes a few business days. Working with a lender that runs Texas USDA files regularly keeps that step from adding delay.
Is there a maximum USDA loan amount in Texas?
No. The USDA Guaranteed program sets no maximum loan amount, so a Texas buyer's ceiling is what their income repays under the debt-to-income guidelines, not a fixed county cap. That is why the same program fits a $119,200 home in Poteet and a $347,400 one in La Vernia. The loan limits people read about apply to the separate Section 502 Direct program, which USDA funds itself.
Can you refinance a USDA loan in Texas?
Yes, but only an existing USDA loan can be refinanced through USDA; a Texas homeowner cannot refinance a conventional or FHA loan into a USDA one. The USDA Streamlined-Assist refinance needs the loan to be at least 12 months old and must cut the principal-and-interest payment by at least $50 a month, and for most borrowers it skips a new appraisal, credit check, and income review.
What property types qualify for a USDA loan in Texas?
USDA finances existing single-family homes, new construction, condos and planned-unit developments, and new manufactured homes titled as real property, all common across the Texas exurbs. The home must be an owner-occupied primary residence in good repair. Existing manufactured homes are generally ineligible unless already carrying a USDA loan, and income-producing property does not qualify.
Which Texas towns are USDA-eligible?
The eligible map covers the exurb counties 30 to 55 miles outside the big metros, while the urban cores are excluded. Near Houston that includes Waller and Hempstead; near Dallas-Fort Worth, Kaufman and Farmersville; near Austin, Elgin, Lockhart, and Smithville; near San Antonio, Poteet, Castroville, and La Vernia. Fast-growing towns like Anna and Taylor are flipping ineligible, so confirm the exact address.
What is the USDA income limit in Texas for 2026?
Most of Texas uses the statewide floor of $122,800 for a household of one to four and $162,100 for five to eight, effective July 13, 2026. Higher-cost metros run above it: about $153,550 near Austin and in Kendall County, $144,900 in Brazoria County, $139,300 in the Dallas metro, and $126,850 in Fort Worth-Arlington. USDA counts every adult in the household, not just the borrowers.