USDA Loan Requirements: Can You Use One on a New-Construction Home?
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To get a USDA home loan, the home must be in an area USDA calls rural, you must live in it as your main home, and your household income cannot be more than 115% of the area's median, according to USDA Rural Development. If you qualify, USDA's guaranteed loan offers 100% financing, so no down payment, and it can be used to buy a brand-new home.
Here is how each rule works, what the loan costs for the 2027 fiscal year, and what changes when the home is new construction.
What are the requirements for a USDA loan?
USDA's Single Family Housing Guaranteed Loan Program page (checked Oct. 19, 2026) lists the basics. You must:
Meet the income limit. Household income ""cannot exceed 115% of median household income"" for your area.
Be eligible to live here. You must be a U.S. citizen, a U.S. non-citizen national or a qualified alien.
Live in the home. You must agree to occupy it as your primary residence.
Buy in an eligible area. The property must be in an eligible rural area on USDA's map.
The same page says the loan is ""offered at a 30-year fixed rate only."" It also says closing costs and ""reasonable/customary expenses"" tied to the purchase may be included in the loan.
The program is not for investment homes. The federal rule for this loan, 7 CFR 3555.151 (eCFR, up to date as of Oct. 13, 2026), says USDA ""will not guarantee loans for investment properties.""
How do I know if a home is in a USDA-eligible area?
Don't guess from the name of the town. USDA runs a free eligibility website where you type in an address or browse a map.
Check the exact address before you fall in love with a home site. Two homes in the same county can land on different sides of the line. The map and the rules can change, so check again if your search drags on.
How much income can you make and still get a USDA loan?
The limit is 115% of the median household income for your area, so it changes by county and by how many people live in your home. USDA's eligibility website has an income tool for each state.
USDA counts household income, not just the people on the loan. Ask your lender how your whole household's income adds up before you assume you are over or under the limit.
What debt-to-income ratio does a USDA loan need?
The federal rule sets two limits, based on your monthly ""repayment income"":
Housing payment: Your monthly principal, interest, taxes and insurance (PITI) ""does not exceed 29 percent.""
Total debt: PITI plus your other monthly debts ""does not exceed 41 percent.""
Here is what that looks like on an EXAMPLE income. These are not real offers, just the math.
EXAMPLE monthly repayment income | 29% housing limit | 41% total-debt limit |
|---|---|---|
$5,000 | $1,450 | $2,050 |
$6,000 | $1,740 | $2,460 |
$7,500 | $2,175 | $3,075 |
The rule also says the ratios ""may exceed"" those limits ""when certain compensating factors exist."" One factor it lists is a credit score of 680 or higher. Others include a small jump in housing cost, savings left after closing and steady work with your current employer.
Is there a minimum credit score for a USDA loan?
The federal rule does not print one minimum score. It says you need a credit history that shows you can repay, and that lenders ""will use credit scores to manually underwrite"" loans. Each lender may set its own score rules on top of USDA's, so ask your lender what it needs.
How much does a USDA loan cost in fees?
A USDA guaranteed loan has two fees. USDA Rural Development's Fiscal Year 2027 notice, dated Sept. 16, 2026, sets them for purchase and refinance loans:
Upfront guarantee fee: 1.00%
Annual fee: 0.35%
USDA's fiscal year 2027 began Oct. 1, 2026. Here is the math on an EXAMPLE price, not a real home:
EXAMPLE: $300,000 purchase | Amount |
|---|---|
Down payment (100% financing) | $0 |
Upfront guarantee fee (1.00% of $300,000) | $3,000 |
Annual fee (0.35% of a $300,000 balance) | $1,050 a year, or $87.50 a month |
Your lender's Loan Estimate will show the real numbers, along with your rate, taxes and insurance. Rates are set by each lender, so compare more than one.
Can you use a USDA loan on new construction?
Yes. USDA's program page says loan money can be used to ""purchase, build, rehabilitate, improve or relocate a dwelling,"" and the property can be a site with a new or existing home.
A brand-new home does come with extra paperwork. USDA's own lender training on new construction says the lender must keep proof that the home was built to an eligible building code, including its energy (thermal) standard. It also needs proof of construction inspections and a builder warranty. That training shows two paths: three eligible construction inspections, or a builder that presents an eligible 10-year insured warranty.
The same training gives an example of a spec home that was finished more than 12 months earlier. USDA treated it as an existing home, not a new one, so different paperwork applied.
What this means for new-construction buyers
If you are shopping new homes and hoping to put little or nothing down, here is a simple plan:
Check the address first. Put the community's street address into USDA's eligibility map before you sign anything.
Check your household income. Use USDA's income tool for your county and household size.
Ask the lender early about USDA. Not every lender offers it. Ask if they do USDA loans on new construction and what paperwork they need from the builder.
Ask the builder about inspections and warranty. The lender will need proof of inspections and an eligible builder warranty, so ask how the builder handles that.
Compare it with other loans. FHA, VA and conventional loans have different rules and costs. Our FHA vs. conventional guide and VA loans on new construction can help you line them up.
For today's homes, prices and builder offers in the places we cover, call 561-704-0091.
Common Questions
What are the main requirements for a USDA loan?
The home must be in a USDA-eligible rural area, you must live in it as your primary residence, and household income cannot exceed 115% of the area median. You must also be a U.S. citizen, U.S. non-citizen national or qualified alien, according to USDA Rural Development.
Do you need a down payment for a USDA loan?
No down payment is required for buyers who qualify. USDA's guaranteed loan offers 100% financing, and closing costs and reasonable expenses tied to the purchase may be included in the loan.
Can I use a USDA loan to buy a new-construction home?
Yes. USDA says loan money can be used to purchase or build a home. For a new home, the lender needs proof it meets an eligible building code, plus construction inspections and a builder warranty.
What are the USDA loan fees for 2027?
USDA's Fiscal Year 2027 notice sets an upfront guarantee fee of 1.00% and an annual fee of 0.35% for purchase and refinance loans. Fiscal year 2027 began Oct. 1, 2026.
What debt-to-income ratio do I need for a USDA loan?
The federal rule sets 29% of repayment income for the housing payment and 41% for total monthly debt. Those limits can be exceeded when compensating factors exist, such as a credit score of 680 or higher.
Can I use a USDA loan for a rental or investment home?
No. The federal rule says USDA will not guarantee loans for investment properties. You must live in the home as your primary residence.
Ready to take the next step?
Call 561-704-0091 to talk with a National House Search specialist, or Schedule a visit.
Related reading: FHA vs. conventional loan, Debt-to-income ratio for a mortgage, Credit score needed to buy a house
Sources: USDA Single Family Housing Guaranteed Loan Program, USDA Fiscal Year 2027 notice, 7 CFR 3555.151 (eCFR), USDA lender training: new construction, USDA eligibility website
This is general information, not financial, tax or legal advice. Figures checked October 19, 2026.