A USDA Rural Development Guaranteed Housing Loan (Section 502) is a 100% financing residential mortgage backed by the U.S. Department of Agriculture. Despite the "rural" label, approximately 97% of U.S. land area — including many outer-ring suburban neighborhoods — qualifies under USDA geographic eligibility maps.
Underwriting eligibility depends on two strict federal thresholds: 1. Geographic Property Eligibility: The subject property must be a single-family primary residence located within a USDA-designated rural or small-town census tract (generally populations under 35,000). 2. Household Income Cap (115% AMI): Total gross income across *all* adult household members (even adults not on the mortgage note) must not exceed 115% of the Area Median Income (AMI) adjusted for household size.
USDA loans require a 1.00% Upfront Guarantee Fee (typically financed into the loan) and a low 0.35% Annual Fee billed monthly as part of the escrow payment.