Allen Markel, REALTOR® · Texas Premier Realty

Paying for It

USDA Loans — Zero Down, and Most Houston Buyers Rule It Out by Mistake

The word 'rural' costs people this loan. It is a line on a government map, not a description of your street — and a lot of ordinary suburbs with sidewalks and new construction sit inside it.

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The honest fit

Best for

  • Buyers looking in the outer parts of the six counties I work — where eligible areas actually are
  • You can handle a monthly payment but haven't saved a down payment
  • Households whose income falls at or under USDA's limit for their county and household size
  • Buyers who assumed zero-down financing ended in 2008 and never looked further

Maybe not if…

  • The exact address isn't in a USDA-eligible area — this is decided address by address, and a house one street over can be a different answer
  • Your household income is above the program's limit for your county and household size
  • You're buying an investment property or a second home; this is for the home you will live in
  • You need to close very quickly — the extra layer of review takes time

The process

How it works

  1. 01

    Check the address first, on USDA's own eligibility map. Everything else is pointless if the property isn't in an eligible area, and this takes about a minute.

  2. 02

    Have a lender run your household income against the current limit for that county and household size. This is the second gate, and it trips more people than the map does.

  3. 03

    Get to a USDA-approved lender specifically. Not every lender is approved to write these, and the ones who aren't will quietly steer you somewhere else.

  4. 04

    We shop inside the eligible area on purpose, and I flag which of the homes you like are in and which are out before you get attached.

The trade

What you get — and what to weigh

What you get

  • 100% financing — no down payment for buyers who qualify
  • A path to ownership without years of saving a lump sum
  • Access to homes in the fast-growing communities on the outer edge of the Houston area, where a lot of new construction is going up
  • An option most buyers in this area have never had explained to them, and most agents don't check

The trade-offs (straight talk)

  • The eligibility map is redrawn periodically — an area that qualifies today may not next year, so confirm before you plan around it
  • USDA counts the household's income, not only the income being used to qualify for the loan, so an adult living with you can affect eligibility
  • Zero down means you start with no equity, and an early move can leave you short after selling costs
  • USDA charges its own guarantee fees; ask your lender to show you the current upfront and annual amounts and exactly how they land in your payment
  • There's an extra review step beyond the lender's, so build a little more time into your closing date

Typically qualifies

  • • The property must be in an eligible rural area as defined by USDA
  • • The home must be your primary residence
  • • Household income at or under the program limit for that county and household size
  • • You apply through a USDA-approved lender — USDA does not lend to you directly under this program

“Here is the whole thing in one sentence: USDA's definition of rural is a legal boundary, and plenty of neighborhoods that look nothing like farmland fall inside it. I've watched buyers rule this out because they pictured a barn. The right move costs you nothing — put the exact address into USDA's eligibility site and look. If it comes back eligible and your household income fits, you may be looking at a home you can buy with no down payment at all. If it comes back ineligible, you've lost sixty seconds.”

Homes sold
175+Homes sold
In closed sales
$54M+In closed sales
Texas markets served
2Texas markets served
Counties served today
6Counties served today

Career totals across two Texas markets — DFW, then Greater Houston.

Questions, answered

Frequently asked questions

No. This is the misunderstanding that costs people the loan. USDA's Single Family Housing Guaranteed Loan Program is for ordinary homes that you live in — the word 'rural' refers to whether the address falls inside an eligible area on USDA's map, not to whether the property has land or livestock. Established subdivisions, new construction, and homes with sidewalks and HOAs all sit inside eligible areas in places around the Houston region.

Let's check the address and your numbers

Send me an address you're considering and I'll check it against USDA's map.If it's eligible, I'll introduce you to a lender approved to write thesethere aren't as many of them as you'd think.

Call (832) 709-2540

Talk to a lender

These are the lenders Allen works with who handle this kind of loan. For any of them you’d like to talk to, tap Make introduction — we’ll make the introduction for you.

Allen Markel is a licensed Texas REALTOR®, not a mortgage lender or loan originator. He does not quote rates or terms and does not decide whether you qualify — only a lender can do that. Introductions are a courtesy; you choose who to work with.

Allen Markel is a licensed Texas REALTOR®, not a mortgage lender, loan originator, or financial advisor, and is not affiliated with or endorsed by the U.S. Department of Agriculture. This page explains in general terms how the USDA Single Family Housing Guaranteed Loan Program works. It is not a loan offer, a rate quote, or a determination that a property or a household qualifies. Eligible-area boundaries, income limits, and fees are set by USDA and change. Property and income eligibility are determined by USDA and a USDA-approved lender. Check any specific address and income at USDA's official eligibility site.

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Allen Markel, REALTOR® · Texas Premier Realty · TREC #0658294

Questions about USDA Loan

What it is

  • What is a USDA loan and who backs it?

    It is a mortgage from an approved lender with backing from the U.S. Department of Agriculture. That backing lets lenders offer financing with nothing down to buyers who qualify. USDA does not lend to you directly under this program, so the lender is who you apply with.

  • Does USDA charge mortgage insurance?

    USDA charges its own fees, an upfront one and an annual one, rather than the mortgage insurance used on other loans. Ask your lender to show the current amounts and how they land in your payment, since they change from time to time.

  • Is a USDA loan a better deal than other low-down-payment loans?

    It depends on the home and on you. USDA can beat FHA on the down payment, but it adds an address test and an earnings limit. Whether it wins on monthly payment is a lender calculation. Ask for each program priced side by side and compare.

Who it fits

  • Who is a USDA loan a fit for?

    Buyers looking in eligible areas, who can handle a monthly payment but have not saved a down payment, and whose household earnings fall within the limit for the county and household size. It is for a home you will live in. A lender confirms whether you actually qualify.

  • Who should skip a USDA loan?

    Anyone whose target address is outside an eligible area, whose household earnings are above the limit, or who is buying an investment property or second home. Buyers who need to close very quickly may also struggle, because there is an extra review. Other programs may work better in those cases.

  • What if my household earnings are right at the limit?

    Then the details matter, such as how the lender counts earnings and who lives in the household. We cannot judge that for you. A USDA-approved lender can run your actual numbers against the current limit for your county and household size. Do it early so you can plan.

  • Can I use USDA to buy a second home or rental?

    No. The program is for the home you will live in as your primary residence. If you are buying something to rent or use part of the year, a conventional loan or another product is the likelier route. A lender can explain what applies to your plan.

How it works

  • How long does it take to check whether an address is eligible?

    About a minute. You enter the address on USDA's own eligibility site and it tells you in or out. We do it for any home you are considering and prefer to do it before you get attached. Eligible areas can be redrawn, so confirm again before you commit.

  • Are eligible areas in every one of the counties you serve?

    Eligible areas tend to be in the outer parts of the counties we work in, but there is no county-level answer, and the boundary can split a street. We check the exact address on USDA's site rather than guessing from a map or a city name.

  • Can the map change while I am under contract?

    The map is redrawn from time to time, and a house that qualifies today may not later, which matters if a purchase takes a long time. Ask your lender when eligibility is locked in for your loan. We check the address first and keep the timeline as short as we can.

  • How do I find a USDA-approved lender?

    Ask directly whether a lender is approved to write USDA loans, since not all are. We work with lenders who handle this kind of loan and can introduce you. Eligibility and qualification are decided by the lender, and you choose who you work with.

  • Do I borrow from the government with a USDA loan?

    No. You borrow from an approved lender, and USDA stands behind part of the loan so the lender can say yes with less risk. That is why you apply through a lender and not a government office. The lender sets your payment and handles the loan.

  • What documents will a USDA lender want?

    Expect proof of earnings for the whole household as well as the borrowers, bank statements, credit information and details about the property. The lender will give you a list. Mention everyone who lives in the home at the start, since household earnings count.

  • What is a loan originator and how is that different from a REALTOR?

    A loan originator is licensed and regulated, takes your information, and runs it through the system to match you to an appropriate loan program. You do not need to know in advance which loan fits, only to give accurate information. A REALTOR does not approve or price loans. We help you use the originator's numbers to shop and write offers.

Costs to weigh

  • Does zero down mean I need no money at all?

    No. You still need cash for closing costs, prepaid taxes and insurance, and probably some savings for moving and repairs. Ask your lender for an estimate of cash to close in writing, since Texas property taxes can make the prepaid portion meaningful.

  • Can USDA fees be financed into the loan?

    Some can, depending on how the lender structures it. Financing a fee means you pay interest on it. Ask your lender to show how the upfront and annual fees appear in your payment and in your total cost, with and without financing.

  • Is zero down a smart move if I might sell soon?

    It can leave you short, because you start with no equity and selling costs can exceed what you have built up in a short stay. If your plans are uncertain, think carefully. Run the numbers with a lender and talk to us about your timeline before you decide.

  • Can the seller pay my closing costs on a USDA loan?

    A seller can agree to contribute as part of the offer, and the program sets limits. It is a negotiating point that depends on the price and the market. We can help you structure it and your lender confirms what is allowed.

  • What are the USDA fees in actual numbers?

    The USDA lender-backed loan has an upfront fee of 1% and an annual fee of 0.35% of the unpaid balance. The upfront fee can often be financed, which means you pay interest on it. Amounts can change over time. A loan originator can give you your numbers and show how they land in your payment.

  • If I put nothing down, do I still need cash to close?

    Usually yes. USDA loans allow 0% down, but closing costs generally run 2% to 5% of the purchase price, plus prepaid items such as insurance and taxes. Those are separate from earnest money. A loan originator can give you your cash to close figure. Ask for it specifically, so zero down does not become a surprise.

  • What does a USDA loan cost each month beyond the loan payment?

    Property taxes, homeowners insurance and the USDA annual fee are commonly part of the monthly payment, and some communities add association dues. Together they shape what a home really costs. Ask a loan originator for a full estimate of the monthly payment, and we can compare it home by home so the numbers fit your budget.

Property and appraisal questions

  • Does a USDA loan require an appraisal?

    Yes. The lender orders one to confirm value, and the property has to meet the program's property requirements. Ask your lender what condition standards apply. We try to flag homes that could struggle before you fall for them.

  • Can I buy a fixer-upper with a USDA loan?

    It is harder. The home has to meet the program's property standards, and a house in rough condition may not pass as it is. If you like a home that needs work, tell us early so we can talk about the lender's requirements and other options.

  • What if the home I love is outside the eligible area?

    Then USDA is off the table for that home. You could look for a similar home inside the area, or price a different program such as FHA or conventional for the one you love. A lender can compare the payment and down payment so you see the tradeoff.

  • Can I use a USDA loan on new construction?

    Sometimes. Whether a new community sits inside a USDA eligible area depends on the exact address, so check it before you fall for a model home. The home still has to meet program requirements and you still need an approved loan originator. Ask how they handle new homes and the timing of completion before you sign a contract.

Offers and timing

  • Why does a USDA loan take longer to close?

    There is an extra layer of review beyond the lender's own, so we build more time into the contract dates. Ask your lender for a realistic timeline and tell us what they say. A little extra planning keeps the closing date from becoming a problem.

  • Do sellers accept USDA offers?

    Yes, as long as the offer is clean and the lender looks able to close on time. The extra review can concern some sellers, so we choose realistic dates and make sure the listing agent can reach your lender. That conversation moves more deals than anything else.

  • How do you make a USDA offer stronger?

    We check the address first, confirm you have a pre-approval from an approved lender, and choose dates that respect the extra review. We also look at the home's condition against the program standards. Talk to us before you tour so we focus on homes that fit.

  • What is earnest money and how does it work with a USDA loan?

    Earnest money is a deposit you make after your offer is accepted to show good faith, held by the title company. It is separate from the down payment and closing costs, and it is usually credited toward your cash due at closing. The amount is negotiated. We explain the contract deadlines that protect it before you sign.

Compared with other options

  • How does USDA compare with a conventional loan with a small down payment?

    USDA can mean no down payment but adds the address test and earnings limit. Conventional has no such tests and works on more property types, but you need some down payment and mortgage insurance may apply. A lender can price both.

  • Is a direct USDA loan the same as a bank-written one?

    No. A direct loan comes from USDA itself, is aimed at lower-earning households, and works differently from the lender-written loan described here. Whether it might fit you is a question for USDA and a lender. Ask them to check both.

  • How does USDA compare with VA?

    For eligible buyers VA has no monthly mortgage insurance, while USDA charges an upfront and an annual fee, so VA may come out lower. Only a priced comparison tells you. USDA has no service requirement but has the address and household earnings tests. If you qualify for both, ask a loan originator to price them side by side.

Getting started

  • How do I get started with a USDA loan?

    Check the address on USDA's site, or send it to us and we will. Then ask an approved lender to compare your household earnings with the county limit for your household size. If both fit, we shop inside the eligible area. Talk to us to get started.

  • Can I check eligibility before I pick a home?

    Yes, and it is smart to look at the eligibility map early, so you know where to focus. Eligibility is address by address, so we still check each home you like. Starting with the map saves you from falling for a house that cannot work.

  • Why have I never heard about USDA from a lender?

    Some lenders are not approved to write USDA loans, and others do few and do not think of it. Neither is a reason for distrust. Ask directly whether they are approved and whether they checked the address. If not, talk to a lender who is.

  • What is the difference between pre-qualification and pre-approval?

    A pre-qualification is a quick estimate based on what you tell a loan originator. A pre-approval means they reviewed your documents and credit and issued a letter stating what they are prepared to lend, subject to conditions. On a USDA loan, ask whether the address was checked too. The pre-approval is the one sellers take seriously.

  • What should I avoid between pre-approval and closing?

    Avoid new debt, large purchases on credit, missed payments, and unexplained money moves. The file is checked again before closing, and USDA adds an extra review, so changes can cost time. Call your loan originator before any big financial move, and tell us about changes to your household so the earnings count stays accurate.

  • How long does USDA approval take?

    Longer than many other loans, because there is an extra layer of review beyond the lender's own. How long depends on the loan originator, the appraisal and how quickly you provide documents. Ask for a realistic timeline in writing, and we will build the contract dates around it. Starting early is how you avoid a rushed closing.

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