USDA Renovation Loans
Found a home that needs a little TLC? A USDA renovation loan lets eligible borrowers finance the purchase and the cost of repairs or improvements in one loan, with 0% down in eligible rural areas.
- Purchase and repairs in one loan
- 0% down for eligible buyers
- Eligible rural areas
The basics
USDA Renovation Loan Overview
A USDA renovation loan combines USDA's 0% down payment financing with funds to repair or improve the property. Eligible borrowers can buy a home in an eligible rural area and finance both the purchase price and renovation costs in one loan, subject to USDA income limits and the program's upfront and annual guarantee fees.
- Guaranteed by
- USDA Rural Development
- Finances
- Purchase + repairs
- Down payment
- 0% for eligible buyers
How it works
Your USDA renovation loan in four steps
One loan covers the home and the repairs, with one licensed loan officer guiding you from pre-approval to closing.
- 01
Get pre-approved
Share your income, assets and credit. Your loan officer checks USDA income limits and how much you may be able to borrow for the home and repairs.
- 02
Choose the home and plan repairs
Find a home in an eligible area and get written bids from a qualified contractor for the work you want to finance.
- 03
Appraisal and underwriting
The appraisal considers the home's value after the planned repairs. The lender reviews your file, then USDA Rural Development reviews it for the guarantee.
- 04
Close and renovate
Sign at closing and move forward with the work. Repair funds are typically held and released to the contractor as work is completed.
Do you qualify?
USDA Renovation Eligibility
A USDA renovation loan follows the standard eligibility requirements of the USDA Rural Development guaranteed loan program, including:
The property must be located in an eligible USDA rural or suburban area.
Household income must be within USDA income limits for the area.
USDA does not set a minimum credit score. Participating lenders may set their own credit requirements.
What you can fix
Repairs that are typically eligible
A USDA renovation loan is meant for repairs that make a home safe, sound and functional. The examples below are common, but the lender, the appraisal and USDA guidelines decide what qualifies for your home.
Roof and structure
Replacing a worn roof, fixing the foundation or repairing structural damage.
Heating, cooling and water heater
Replacing or repairing HVAC systems and water heaters, which matters in a Texas summer.
Plumbing, electrical, well and septic
Bringing core systems up to working order, including private water and septic systems common in rural homes.
Health and safety fixes
Correcting hazards or code issues the appraisal or inspection flags so the home is safe to live in.
Energy efficiency
Updates such as insulation, windows or doors that can lower energy use and monthly bills.
Accessibility
Ramps, wider doorways or bathroom changes that make the home work for someone with a disability.
Usually not eligible
Luxury or recreational items, such as a new swimming pool or outdoor kitchen, are generally not covered. Work is typically done by a qualified contractor with written bids rather than by the buyer.
Not sure if your project fits? Compare it with a standard USDA loan, or ask a loan officer.
Get pre-approved
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USDA renovation loan FAQs
A USDA renovation loan is a USDA-guaranteed mortgage that finances the home and eligible repairs in one loan. You get one closing and one monthly payment.
It typically covers repairs that make the home safe, sound and functional, such as roofing, heating and cooling, plumbing, electrical and accessibility updates. Luxury items are generally not eligible, and the lender and USDA guidelines decide what qualifies.
Usually, yes. Most lenders require a licensed or qualified contractor with written bids, and do-it-yourself work is generally not allowed.
Repair funds are typically held after closing and released to the contractor as the work is completed and inspected.
The same buyers who qualify for a USDA home loan: the home must be in an eligible area, household income must be within USDA limits and the home must be your primary residence.
Usually not. Like other USDA loans, eligible borrowers can often buy with no down payment, subject to credit approval and the appraised value after repairs.