USDA Loans
ZERO DOWN, AND CLOSER TO TOWN THAN YOU THINK
The most overlooked loan in the Hill Country. No down payment, cheaper mortgage insurance than FHA, and an eligibility map that covers far more of Kerr County and the surrounding area than almost anyone expects.
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Two Tests, and the Property Goes First
A USDA loan is unusual among mortgage programs: the house has to qualify before you do. Two separate gates, and both have to open. The property must sit inside a USDA-eligible area, and your household income must fall under the limit for that county.
Clear both and the benefits are considerable — no down payment at all, and mortgage insurance that costs meaningfully less than FHA’s. It is genuinely the cheapest route into a home for the people it fits.
One point of clarity the program’s own name obscures. There are two USDA loans. The Guaranteed loan comes from a lender with USDA backing behind it — that is this program, and the one Chet originates. The Direct loan is made by USDA itself for very low income households, applied for through a Rural Development office rather than a broker. If Direct is where you belong, Chet will tell you so and point you there.
The Property Test
“Rural” Is a Map, Not a Feeling
This is where most people rule themselves out by mistake. USDA eligibility is not a judgment about how remote a place feels — it is a boundary line drawn on a map, and the boundaries take in a great deal of ordinary residential Texas.
- You are not required to buy a farm. No acreage minimum, no agricultural use, no livestock. An ordinary house on an ordinary lot on an ordinary street is exactly what the program finances.
- Small towns generally qualify in full. Communities well under the population threshold are typically eligible from edge to edge — not merely the outskirts.
- The edge of a city is often eligible when the middle is not. The line frequently runs between neighbourhoods rather than around a whole town, which is why guessing fails and checking works.
- Check the address, not the town. Two houses a few streets apart can land on opposite sides of the boundary. Guessing from a postcode or a town name is how eligible buyers talk themselves out of the program.
How this plays out around Kerrville and San Antonio
- Most home locations in Kerrville and the surrounding area qualify. Not the far edges of the county — most of it. If you are buying in or around Kerrville, USDA is worth checking before you assume anything else.
- Property inside the San Antonio city limits is not eligible. The city is too large to fall inside the program, and that boundary is firm.
- Parts of Bexar County outside the city may still qualify. This is exactly the situation where the line runs between addresses rather than around a town, and where checking beats guessing.
You can look up any address yourself on USDA’s official eligibility site — choose Single Family Housing Guaranteed, then Property Eligibility, and enter the full street address.
Two things to know before you rely on the result. USDA describes its own map as a preliminary screening tool rather than a final determination — eligibility is confirmed when a complete application is reviewed. And some addresses come back ambiguous rather than a clear yes or no. If you get a result you are not sure about, or a property that sits near a boundary, send Chet the address rather than assuming the answer. Reading those edges correctly is the part worth having someone do for you.
The Income Test
Household Income, Not Your Income
The second gate catches more people than the first, because it does not measure what most people assume it measures.
Everyone in the house counts
USDA looks at the income of every adult living in the home — not just the people on the loan application. A working adult child, a parent living with you, a spouse deliberately left off the loan: all of it counts toward the limit.
This is the single most common surprise on a USDA file, and it is better found in the first conversation than three weeks in.
Two different incomes get measured
Eligibility uses total household income. Whether you can afford the payment uses only the borrowers’ income. They are separate calculations and they routinely produce different numbers.
So a household can pass the affordability test and fail the eligibility test, or the reverse. Neither one predicts the other.
- Deductions come off before USDA counts your income. Dependents under 18, documented childcare costs, and certain medical expenses for elderly or disabled household members all reduce the figure that gets measured. Being modestly over the headline number does not necessarily mean you are over the real one.
- The limit is a floor, not a ceiling. USDA sets it county by county at a percentage of area median income, but no county falls below the national standard below. Higher-cost metropolitan areas get more; nowhere gets less.
| Household size | Standard income limit |
|---|---|
| 1 to 4 people | $122,800 |
| 5 to 8 people | $162,100 |
These are the national standard limits for the 2026 fiscal year, published by USDA Rural Development in July 2026. Kerr County, Bexar County and the surrounding Hill Country all sit at this standard. Read it as a floor: if your household income is under these figures, you are inside the limit. Above them it is worth checking rather than assuming, because deductions come off first and larger households scale upward again — add 8% of the four-person figure for each person beyond eight. Chet will confirm the current number for your county and household size before you rely on it.
What It Costs
The Cheapest Mortgage Insurance in Government Lending
USDA charges a guarantee fee in two parts, in place of the mortgage insurance other programs carry. It is what funds the program, and it is the quietest advantage USDA has.
| USDA | FHA | |
|---|---|---|
| Minimum down payment | None | 3.5% |
| Upfront fee | 1.00% | 1.75% |
| Annual fee | 0.35% | 0.55% |
Both upfront fees are normally financed into the loan rather than paid at closing, and both annual fees are collected monthly as part of the payment.
- For a borrower who qualifies for both, USDA wins on every line. Less down, a smaller upfront fee, and a lower monthly cost. Eligibility is the only reason to choose FHA over USDA, not price.
- The annual fee does not cancel. Like FHA’s at a low down payment, it runs for the life of the loan. The route out is refinancing into a conventional loan once you have equity and the credit to support it — worth understanding as a plan rather than discovering later.
- Closing costs can sometimes be financed too. If the home appraises for more than you are paying, USDA allows the difference to absorb closing costs. Combined with no down payment, that is one of the few genuine routes into a home with almost nothing out of pocket.
Qualifying
What Else USDA Asks
Credit
640 is the practical threshold — it is the point at which USDA’s automated underwriting system will generally take a file. Below that, between roughly 600 and 639, a loan can still be written but it moves to manual underwriting, which asks more of the rest of the file. USDA itself publishes no hard minimum.
The property and how you use it
A single-family home you will live in as your primary residence. No second homes, no rentals, no working farms. The house must be in sound, liveable condition — USDA is not looking for a showpiece, but it will not finance a home with safety or structural problems.
Income stability and debts
A dependable income history and debt ratios within USDA guidelines, with room to go higher when the file is strong elsewhere. There is no maximum loan amount on a Guaranteed USDA loan — how much you can borrow is decided by what you can repay and what the home appraises for.
Not just for first-time buyers
There is no first-time buyer requirement, and no limit on how many times you may use the program over a lifetime. What USDA does expect is that you are not keeping another suitable home — it finances the house you will live in, not an addition to a portfolio.
Local Detail
What This Means Around Kerrville
- More of this area qualifies than people believe. Much of Kerr County and the surrounding Hill Country falls inside the eligible map, including addresses that feel thoroughly suburban. The assumption that USDA is for somewhere further out is the main reason the program goes unused here.
- Wells and septic systems are ordinary here, and USDA has rules about them. Water supply and waste disposal both have to be adequate and safe, with testing where required. On a place with acreage this is worth raising before you are under contract rather than after the appraisal.
- Acreage is allowed, but the land is not the point. USDA finances the house; a large parcel is fine, but value concentrated in land rather than the dwelling can complicate an appraisal. Buying forty acres with a small house on it is a conversation to have early.
- Budget from the full payment. With no down payment, your loan balance starts higher, and Texas property taxes and insurance are collected monthly on top of principal, interest and the annual guarantee fee. The all-in figure runs well above what a payment calculator suggests.
- File your homestead exemption after closing on your primary residence. It reduces taxable value and limits how fast assessments can rise. Free, and not automatic.
If This Isn’t Quite Your Situation
Other Programs Worth a Look
VA Loans
If you served, VA also means no down payment — with no income limit, no map to satisfy, and no monthly mortgage insurance at all.
Learn More →FHA Loans
Over the income limit, or the address falls outside the map? FHA is the next most forgiving route on credit and down payment.
Learn More →Conventional Loans
With solid credit and some down payment, mortgage insurance that eventually cancels can beat USDA over the long run.
Learn More →USDA Loan Questions
Do I have to buy a farm or live in the middle of nowhere?
Is there really no down payment?
Whose income counts toward the limit?
What is the USDA income limit for my county?
How does the cost compare with an FHA loan?
Does the USDA annual fee ever go away?
What credit score do I need?
Can I use a USDA loan more than once?
Chet’s full Mortgage FAQs page covers credit, closing costs, appraisals and what to expect at every step.
Start With the Address
Send Chet a property and he’ll tell you whether it qualifies — and what the current income limit is for your county. No cost, no obligation.
