USDA home loans, also known as Rural Development loans, can provide 100% financing with no down payment for qualified borrowers purchasing eligible homes in rural and many suburban communities.

The USDA Single Family Housing Guaranteed Loan Program is designed to help eligible low- and moderate-income households purchase a primary residence in an eligible area.

Despite the name "rural," USDA financing isn't limited to farms or remote areas. Many communities outside larger metropolitan areas may qualify, including areas throughout Alabama, the Florida Panhandle, Mississippi, Louisiana, and other markets 

served by Fairhope Mortgage.

Fairhope Mortgage can help determine whether both you and the property meet USDA eligibility requirements.

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Down Payment

$0 down for qualified borrowers.

Maximum Purchase Financing

Up to 100% of the eligible property's value, subject to USDA requirements.

Loan Term

30-year fixed-rate mortgage.

Occupancy

The property must be the borrower's primary residence.

Household Income Limits

USDA household income cannot exceed the applicable program limit for the property's area and household size.

Property Location

The property must be located within a USDA-eligible area.

Mortgage Insurance

USDA uses an upfront guarantee fee and annual fee rather than conventional private mortgage insurance.

Current Upfront Guarantee Fee

1% of the loan amount. The fee can generally be financed.

Current Annual Fee

0.35% of the scheduled unpaid principal balance, calculated according to USDA requirements.

Property Types

Eligible properties may include existing homes, new construction, condominiums, planned-unit developments, modular homes, and qualifying manufactured homes.

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The USDA Single Family Housing Guaranteed Loan Program, also known as the Section 502 Guaranteed Loan Program, helps eligible households purchase homes in qualifying rural areas.

USDA Rural Development provides a loan guarantee to approved lenders, allowing qualifying borrowers to purchase eligible homes with 100% financing.

This means an eligible borrower may be able to purchase a home without making a traditional down payment.

USDA states that the Guaranteed Loan Program is available to households with income that does not exceed 115% of the applicable median household income, subject to USDA's household-income calculation and area-specific limits.

The property must also be located within a USDA-eligible geographic area and generally must be occupied as the borrower's primary residence.

USDA financing cannot generally be used to purchase a traditional investment property or vacation home.

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No down payment is required for qualified borrowers when the transaction meets USDA requirements.

USDA financing can provide up to 100% financing for an eligible property.

That makes USDA one of the major mortgage programs offering the possibility of purchasing a home without a traditional down payment.

The other major zero-down-payment mortgage option is VA financing for eligible Veterans, active-duty service members, and certain surviving spouses.

A zero down payment does not necessarily mean a borrower will need zero dollars at closing.

Closing costs, prepaid homeowners insurance, property taxes, escrow deposits, inspections, and other transaction expenses may still apply.

Depending on the transaction, some costs may potentially be covered through seller contributions, lender credits, eligible gift funds, or financed when permitted by USDA guidelines.

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$200,000 Purchase Price

Potential Down Payment: $0

Base USDA Loan: $200,000

$250,000 Purchase Price

Potential Down Payment: $0

Base USDA Loan: $250,000

$300,000 Purchase Price

Potential Down Payment: $0

Base USDA Loan: $300,000

$350,000 Purchase Price

Potential Down Payment: $0

Base USDA Loan: $350,000

$400,000 Purchase Price

Potential Down Payment: $0

Base USDA Loan: $400,000

These examples assume the borrower, property, income, appraisal, and transaction satisfy USDA requirements.

The applicable USDA upfront guarantee fee may generally be financed above the base loan amount.

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USDA eligibility is determined by the property's location.

A property does not necessarily have to look "rural" to qualify.

USDA-designated eligible areas can include small towns, communities outside major cities, and certain suburban areas.

The most reliable way to determine geographic eligibility is to check the property's exact address using USDA Rural Development's official Property Eligibility Map.

CHECK THE OFFICIAL USDA PROPERTY ELIGIBILITY MAP

https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp

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The USDA Property Eligibility Map allows you to search an exact property address or browse a general area to determine whether a home appears to be located within a USDA-eligible area.

To use the map:

1. Open the USDA Property Eligibility website.
2. Select "Single Family Housing Guaranteed."
3. Select "Property Eligibility."
4. Accept USDA's property eligibility disclaimer.
5. Enter the exact property address or zoom into the area you want to search.
6. Review whether USDA identifies the location as eligible.

The map is extremely useful for homebuyers who want to identify communities where USDA financing may be available.

Final property eligibility is determined according to current USDA requirements. Eligibility boundaries can change, so a property should be checked using the current USDA system rather than relying on an old map or previous eligibility determination.

VIEW THE LIVE USDA ELIGIBILITY MAP

https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp

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USDA financing can be particularly useful for buyers looking outside the more densely populated portions of Baldwin County.

Areas around communities such as Robertsdale, Bay Minette, Loxley, Summerdale, Elberta, Silverhill, and other parts of Baldwin County may contain USDA-eligible properties depending on the exact address and current USDA eligibility boundaries.

Eligibility should never be assumed based only on the city name or ZIP code.

Two properties relatively close to one another can have different eligibility results if one is inside an ineligible boundary and the other is outside it.

Fairhope Mortgage can check a specific property address before you make an offer.

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USDA loans have household-income limits.

This is one of the most important differences between USDA and programs such as FHA or standard conventional financing.

For the USDA Guaranteed Loan Program, household income generally cannot exceed 115% of the applicable median household income for the area, subject to USDA's calculation rules.

USDA income eligibility is also different from simply calculating the income needed to qualify for the mortgage.

USDA considers qualifying repayment income when determining whether a borrower can afford the mortgage, while annual household income is used to determine whether the household meets USDA program eligibility.

Income from certain household members who are not borrowers on the mortgage may therefore still affect USDA household-income eligibility.

Applicable deductions may also reduce adjusted household income for eligibility purposes.

Because income limits vary by location and household composition, borrowers should use USDA's current income eligibility system rather than relying on an old income-limit chart.

CHECK CURRENT USDA INCOME LIMITS

https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

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USDA does not establish one universal minimum credit score that guarantees approval of every USDA Guaranteed Loan.

Loans are commonly evaluated through USDA's Guaranteed Underwriting System, known as GUS.

Credit history, payment history, debts, income, assets, housing history, and other risk factors can affect the underwriting decision.

Some lenders may also impose their own minimum credit-score requirements or other overlays beyond USDA's underlying requirements.

Fairhope Mortgage can evaluate borrowers with a variety of credit profiles, including scenarios that may require additional documentation or manual underwriting.  Fairhope Mortgage can do a manually underwritten USDA loan with credit scores as low as 550 depending on the situation. 

A lower credit score does not automatically mean a borrower should assume USDA financing is unavailable.

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USDA evaluates both the proposed housing expense and the borrower's total monthly debt obligations.

Automated underwriting through GUS may permit qualifying loans based on the complete credit profile and underwriting findings rather than one universal maximum DTI.

Loans receiving certain GUS findings or requiring manual underwriting are subject to USDA's manual underwriting ratio and waiver requirements.

Because credit score, housing history, reserves, energy efficiency, and other compensating factors can affect the analysis, borrowers should not determine USDA eligibility solely from a DTI calculator found online.  Typically, debt-to-income ratio limits are lower than both FHA and conventional loans. 

Fairhope Mortgage can evaluate the complete loan scenario and determine which USDA underwriting requirements apply.

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USDA Guaranteed Loans do not use conventional Private Mortgage Insurance or FHA Mortgage Insurance Premiums.

Instead, USDA currently charges an upfront guarantee fee and an annual fee.

Upfront Guarantee Fee

The current USDA upfront guarantee fee is 1% of the loan amount.

The upfront fee can generally be financed into the mortgage rather than paid entirely in cash at closing.

Annual Fee

The current USDA annual fee is 0.35%.

The annual fee is calculated according to USDA requirements based on the scheduled unpaid principal balance and is generally collected as part of the borrower's monthly mortgage payment.

These fees are subject to change by USDA, so current fees should be confirmed when applying for financing.

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Here is a simplified example of a qualifying USDA purchase.

Purchase Price

$300,000

Down Payment

$0

Base Loan Amount

$300,000

1% USDA Upfront Guarantee Fee

$3,000

Approximate Loan Amount With Financed Guarantee Fee

$303,000

This example is for educational purposes and assumes the property appraises sufficiently and all USDA financing requirements are satisfied.

Closing costs, prepaid expenses, homeowners insurance, property taxes, escrow deposits, and other transaction expenses may still apply.

Depending on the transaction and USDA requirements, eligible seller contributions, lender credits, gifts, or other permitted sources may help cover some of those expenses.

This example is not a Loan Estimate or offer of credit.

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USDA financing allows eligible seller contributions toward certain buyer closing costs, subject to program requirements.

USDA generally permits seller or other interested-party contributions of up to 6% of the sales price toward eligible closing costs and expenses.

This can be particularly helpful for borrowers using USDA because the combination of 100% financing and seller-paid eligible closing costs can significantly reduce the amount of cash a qualified borrower needs for a home purchase.

Seller contributions cannot be used in ways prohibited by USDA guidelines and cannot exceed eligible costs.

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Potentially.

A unique feature of USDA financing is that eligible closing costs may sometimes effectively be financed when the property appraises for more than the purchase price.

The final loan amount and eligible costs must comply with USDA's maximum loan calculation and appraisal requirements.

This means that a qualified buyer purchasing a property below its appraised value may potentially have additional flexibility with eligible transaction costs.

The availability of this feature depends on the individual transaction and appraisal.

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USDA Guaranteed Loan funds can be used to purchase qualifying new or existing residential properties that will be occupied as the borrower's permanent residence.

Eligible property types may include:

Single-family detached homes

Attached homes

Eligible condominiums

Planned-unit developments

Modular homes

Eligible manufactured homes

New construction

Certain rehabilitation transactions

The property cannot generally be an income-producing property under the USDA Single Family Housing Guaranteed Loan Program.

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Yes, USDA financing can be available for qualifying manufactured homes.

This is an area where older information found online can be misleading.

USDA updated its manufactured-housing rules in 2025. Eligible existing manufactured homes can now potentially qualify under the Single Family Housing Guaranteed Loan Program when USDA requirements are satisfied.

This replaced the older framework under which existing manufactured homes were generally restricted except for certain previously USDA-financed homes and properties located in pilot states.

Both new and eligible existing manufactured homes can therefore potentially qualify today.

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An existing manufactured home must satisfy USDA's specific Chapter 13 requirements.

Among other requirements, USDA currently provides that an existing manufactured home generally cannot have a manufacture date exceeding 20 years from the date of loan closing unless the unit and site are already financed with a Section 502 loan.

The home must be installed on an acceptable permanent foundation.

The property must meet applicable Federal Manufactured Home Construction and Safety Standards.

Required HUD certification information must be available or appropriately verified.

Certain alterations and modifications can create eligibility issues unless they meet USDA requirements.

USDA will not generally guarantee the purchase of a manufactured home that has been moved from a site other than a manufacturer or dealer lot to the site securing the new mortgage.

The tow hitch and running gear cannot remain.

The manufactured home and site must also satisfy USDA appraisal, property, title, lien, and real-estate requirements.

Because manufactured-home transactions involve both federal USDA requirements and state-specific title and real-property laws, these transactions should be reviewed early in the mortgage process.

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Alabama has additional title and real-property procedures that are important when financing a manufactured home.

USDA requires the manufactured home and site to be treated as real estate for the mortgage transaction according to applicable requirements. The mortgage must be secured by both the unit and the site, and USDA does not permit a combination of a chattel mortgage and real-estate mortgage for the guaranteed loan.

For Alabama manufactured homes designated model year 2000 or newer, the Alabama Department of Revenue provides a process to cancel the manufactured home's certificate of origin or certificate of title when the home is permanently affixed to real property and ownership of the home and land is identical.

Alabama defines "permanently affixed" for this purpose to include removal of the tongue, axles, and wheels and installation in accordance with Alabama Manufactured Housing Commission requirements.

The Alabama title-cancellation process can therefore become an important part of determining whether an Alabama manufactured-home transaction satisfies USDA and title requirements.

Manufactured homes from model year 1999 and earlier are exempt from Alabama's certificate-of-title requirement, which means the documentation analysis can differ for an older unit.

Because state requirements vary, a manufactured home that qualifies in Alabama may require different title documentation in Florida, Mississippi, Louisiana, or another state.

Fairhope Mortgage reviews the state-specific requirements along with USDA Chapter 13 requirements before determining whether a particular manufactured home can qualify.

EXPLORE MANUFACTURED & MOBILE HOME LOANS

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USDA distinguishes between new and existing manufactured housing.

A new manufactured home generally must have been built within 12 months of the loan closing and meet applicable USDA requirements for new manufactured housing.

Existing manufactured homes have a separate set of eligibility requirements under USDA Handbook Chapter 13.

The age of the home, original installation, permanent foundation, HUD certification, alterations, title status, ownership of the land, appraisal, and whether the home has previously been moved can all affect eligibility.

For that reason, buyers considering a manufactured home should provide the home's year, make, model, HUD label information, title information, land ownership, and current location as early as possible in the pre-approval process.

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USDA financing may also be available for qualifying new construction.

USDA offers a Single-Close Construction-to-Permanent option through participating lenders.

This type of financing can combine the construction financing and permanent USDA mortgage into one transaction, potentially allowing an eligible borrower to build a qualifying primary residence with USDA financing.

Additional builder, construction, property, inspection, and lender requirements apply.

EXPLORE CONSTRUCTION LOANS

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USDA financing can be particularly attractive to first-time homebuyers because of the potential for 100% financing.

However, you do not have to be a first-time homebuyer to qualify for a USDA Guaranteed Loan.

An eligible repeat buyer may also qualify if the borrower, household income, property, occupancy, and transaction meet USDA requirements.

USDA may be particularly worth evaluating for buyers who:

Have limited funds available for a down payment

Are purchasing outside a major urban area

Meet USDA household-income requirements

Plan to occupy the home as their primary residence

Want a 30-year fixed-rate mortgage

Are comparing USDA with FHA or low-down-payment conventional financing

EXPLORE FIRST-TIME HOMEBUYER OPTIONS

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USDA can provide 100% financing for qualifying borrowers purchasing eligible properties.

FHA generally requires a minimum 3.5% down payment for qualified borrowers with an FHA Minimum Decision Credit Score of 580 or higher.

For example, on a $300,000 purchase:

USDA Potential Down Payment

$0

FHA 3.5% Down Payment

$10,500

However, down payment is only one part of the comparison.

USDA has geographic and household-income eligibility requirements that FHA does not have.

FHA can therefore be available for properties and borrowers that don't qualify for USDA.

The best option depends on the borrower, property location, household income, credit profile, monthly payment, mortgage insurance or guarantee fees, and overall transaction.

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USDA can provide 100% financing for qualifying borrowers and properties, while conventional financing generally requires some borrower investment unless another eligible source covers it.

USDA also has household-income and geographic eligibility restrictions.

Conventional financing does not have USDA's geographic restrictions and can be used for primary residences, second homes, and investment properties depending on the program.

USDA Guaranteed financing is intended for an eligible primary residence.

Borrowers who qualify for both should compare the estimated interest rate, payment, fees, mortgage insurance or annual fee, cash required at closing, and long-term costs.

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No. Qualified borrowers can receive up to 100% financing when both the borrower and property meet USDA requirements.

No. Eligible repeat buyers can also qualify for USDA financing.

No. The property must be located within a USDA-designated eligible area and meet USDA property requirements.

Yes. USDA eligibility can include certain communities and areas that consumers may consider suburban rather than traditionally rural. The exact address should be checked using USDA's current eligibility map.

Yes. USDA Guaranteed Loans have household-income limits based on the property location and household composition.

Potentially. USDA's household-income eligibility calculation can include income from household members who aren't borrowers on the mortgage, subject to USDA's specific income rules and exclusions.

USDA does not establish one universal credit score that guarantees approval. Credit history and the overall loan profile are evaluated under USDA requirements, and individual lenders may have additional requirements.

Yes. Both qualifying new and eligible existing manufactured homes may potentially be financed under current USDA requirements.

Potentially, but USDA currently restricts existing manufactured homes with a manufacture date exceeding 20 years from the loan closing unless the unit and site are already financed with a Section 502 loan. Other USDA and state-specific requirements also apply.

Potentially, yes. USDA's current guidance allows eligible single-wide manufactured homes when Chapter 13 manufactured-housing requirements are satisfied.

USDA generally does not guarantee the purchase of a manufactured unit moved from a site other than a manufacturer or dealer lot to the site securing the mortgage. The specific history of the home should be reviewed before assuming eligibility.

No. The USDA Single Family Housing Guaranteed Loan Program is designed to finance an eligible borrower's primary residence rather than a traditional investment property.

Potentially. An eligible condominium may qualify when the property, project, borrower, and transaction satisfy USDA requirements.

Yes, subject to USDA requirements and applicable contribution limits.

Potentially. Certain eligible costs may be included when the transaction and appraised value support the USDA maximum loan calculation.

USDA uses an upfront guarantee fee and annual fee rather than conventional PMI. The current upfront guarantee fee is 1%, and the current annual fee is 0.35%.

Yes. Self-employed borrowers can potentially qualify when income is properly documented and meets USDA stability, calculation, household-income, and underwriting requirements.

Potentially. USDA offers construction financing options, including a Single-Close Construction-to-Permanent program through participating lenders.

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Fairhope Mortgage uses current USDA Rural Development guidance when evaluating USDA financing.

USDA Single Family Housing Guaranteed Loan Program

Official USDA overview of the Section 502 Guaranteed Loan Program.

https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program

USDA Property Eligibility Map

Search an exact address or explore USDA-eligible geographic areas.

https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

USDA HB-1-3555 Guaranteed Loan Program Technical Handbook

Official USDA underwriting and program guidelines.

https://www.rd.usda.gov/resources/directives/handbooks

USDA Loan Origination Resources

Current USDA lender guidance, income resources, underwriting information, forms, and program documentation.

https://www.rd.usda.gov/resources/usda-linc-training-resource-library/loan-origination

USDA Manufactured Home Guidelines

Manufactured-home requirements are primarily contained in Chapter 13 of HB-1-3555.

https://www.rd.usda.gov/media/file/download/3555-1chapter13.pdf

Alabama Manufactured Home Title Requirements

Official Alabama Department of Revenue information concerning manufactured-home titles and title cancellation.

https://www.revenue.alabama.gov/faq-categories/manufactured-homes/

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Fairhope Mortgage helps qualified homebuyers evaluate USDA financing throughout eligible communities in the markets we serve.

Our service areas include communities throughout:

Baldwin County, Alabama

Mobile County, Alabama

South Alabama

The Florida Panhandle

The Mississippi Gulf Coast

Louisiana

North Alabama

And other markets where Fairhope Mortgage is authorized to originate mortgage loans.

USDA eligibility varies by exact property address.

As our individual service-area pages are completed, we'll link them here so buyers can explore local mortgage information for Fairhope, Daphne, Spanish Fort, Foley, Gulf Shores, Orange Beach, Bay Minette, Robertsdale, Mobile, Pensacola, Huntsville, New Orleans, and other communities we serve.

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Tom Kalagher

Mortgage Loan Officer & Branch Manager

Fairhope Mortgage

Individual NMLS #2028566

Fairhope Mortgage helps homebuyers evaluate USDA, FHA, VA, conventional, and specialty mortgage options throughout the Gulf Coast.

USDA financing can be an excellent option, but eligibility depends on more than simply finding a house in a rural area.

We can help determine whether your household income qualifies, verify the property's USDA eligibility, evaluate your credit and debt-to-income profile, and determine whether USDA or another mortgage program provides the appropriate financing option for your situation.

Fairhope Mortgage, LLC

314 Magnolia Ave, Suite 101

Fairhope, AL 36532

GET PRE-APPROVED

CHECK USDA ELIGIBILITY

CONTACT FAIRHOPE MORTGAGE

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Last reviewed: September 2026

Reviewed by: Tom Kalagher, Mortgage Loan Officer, NMLS #2028566

USDA program information on this page is based primarily on current U.S. Department of Agriculture Rural Development guidance, including the Single Family Housing Guaranteed Loan Program Technical Handbook HB-1-3555.

USDA guidelines, eligible geographic areas, household-income limits, guarantee fees, annual fees, and individual lender requirements can change. State laws can also affect manufactured-home title and real-property requirements.

Contact Fairhope Mortgage for current program eligibility and requirements.