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Wondering what the USDA Maine Loan Requirements are to qualify for a new home?

The USDA RD Loan program is designed to provide affordable financing for eligible individuals and families in rural communities. In this blog post, we will delve into the USDA Maine Loan Requirements, helping you understand the qualifications and steps needed to secure this type of loan.

What is a USDA loan?

USDA home loans are residential mortgages backed by the Department of Agriculture. They’re available to eligible borrowers buying homes in suburban or rural areas of a state. USDA Maine loan requirements are aimed at helping low- to moderate-income families purchase safe homes in less densely populated areas.

USDA loans can go by a few different names, including Rural Development or RD loans, or even “Section 502” loans—named for the USDA rulebook section that describes the home loan program. Despite the “rural” element, USDA loans are only available for single-family, owner-occupied homes; you can’t use USDA loans to purchase farms, investment properties, or vacation homes.

USDA Maine Loan Requirements

Location Eligibility

The USDA RD Loan program primarily focuses on assisting borrowers in rural areas. Before proceeding, it is essential to ensure that the property you wish to purchase or refinance falls within a designated rural area. The USDA provides an online tool called the “USDA Property Eligibility Map” that can help you determine whether your desired location qualifies. Mine is a great place to qualify for a USDA RD mortgage as most of Maine is considered Rural. Tip: Avoid Portland, Lewiston, Auburn.

For more info on eligible areas, head to the USDA property eligibility screen.

Income Eligibility

What are the USDA Maine Loan Requirements for income? The program aims to support low- to moderate-income households. The eligibility is determined based on the total household income, including income from all adult members of the household. USDA uses income limits based on the area’s median income, family size, and the number of individuals who are dependents or elderly.

The majority of Maine falls under the USDA income limit for 1-4 member households of $103,500. Most households in Maine with between 5-8 members have a $136,600 income threshold. You can find all Maine USDA income limits here.

Citizenship or Residency

USDA RD Loans are available to both U.S. citizens and non-citizens who are legally residing in the United States. Non-citizens must provide proof of eligible immigration status, such as a permanent resident card (Green Card), work visa, or other appropriate documentation.


While USDA RD Loans are known for being accessible to borrowers with limited credit history, the loan program does have some credit requirements. Lenders will assess your creditworthiness by reviewing your credit score, credit history, and overall financial situation. It is important to have a reasonably good credit standing and a demonstrated ability to repay the loan.

There’s no minimum credit requirement for the USDA loan, however, borrowers with a credit score of 640 or higher are eligible for streamline processing, an automated underwriting process. Borrowers with a credit score lower than 640 are still eligible to receive a USDA loan, though they will be subject to the standard underwriting process. If you have a nontraditional or no credit history, you might still be eligible for a USDA loan; lenders evaluate such applications on a case-by-case basis.


Loan Repayment Ability

Lenders will evaluate your ability to make regular mortgage payments by considering your income, debts, and other financial obligations. A steady and reliable source of income is crucial for loan approval. Lenders typically require a debt-to-income ratio (DTI) of no more than 41%. This means that your monthly debts, including the new mortgage payment, should not exceed 41% of your monthly income.

Exceptions can be made up to 46% with compensating factors like cash reserves, strong credit, and additional assets.

Property Requirements

USDA RD Loans have specific property requirements to ensure the safety and livability of the homes financed under the program. The property should be located in a designated rural area and must be the borrower’s primary residence. Additionally, the property must meet certain quality standards and safety guidelines.

Things to look for but can be fixed prior to Appraisal: Peeling Paint, Missing Handrails, Broken Stairs

USDA uses property standard guidelines similar to those set out by the FHA.

USDA Mortgage Insurance

When obtaining a USDA loan, borrowers are responsible for two types of mortgage insurance fees: the Annual fee and the Guarantee fee.

Guarantee Fee

At the time of closing, borrowers are required to pay a Guarantee fee that amounts to 1% of their total loan amount. For instance, if you have a $300,000 mortgage, the one-time fee would be $3,000. To make it more convenient for borrowers, many choose to include the USDA Guarantee Fee in their loan, which helps reduce upfront expenses.

Annual Fee

In addition to the Guarantee fee, there is also an annual fee that is calculated at 0.35% of the remaining outstanding mortgage balance. This annual fee is divided into 12 equal portions and is added to the borrower’s regular monthly mortgage payment.

To provide an estimate, for every $100,000 borrowed, the annual fee amounts to approximately $29 per month. So, for a $300,000 mortgage, borrowers would pay an extra $87 as part of their monthly mortgage payment.

Importance of Fees

Both the Guarantee and Annual fees play a crucial role in supporting the sustainability of the USDA loan program on a national level. These fees help maintain the availability of loans and ensure the program remains viable for future homebuyers.

USDA Loan Down Payment and Closing Costs

USDA loans Maine require a $0 down payment. USDA loans allow borrowers to finance 100% of their home’s purchase price.

Borrowers do need to cover closing costs, however, which typically equal between 3-5% of the home’s purchase price. Closing costs include loan origination fees, title fees, and more. Sellers can contribute up to 6% in seller paid closings cost. Your agent can negotiate this for you after your Maine Mortgage Lender prequalifies you.

The USDA does permit borrowers to use other sources, such as monetary gifts from family, to pay closing costs. Your Lender will discuss all options for closing cost that meet USDA Maine Loan Requirements.


The USDA Rural Development Loan program provides an excellent opportunity for individuals and families to achieve homeownership in rural areas. By meeting the USDA Maine Loan Requirements above, you can increase your chances of securing a USDA RD Loan. Remember to verify the eligibility of the property location, ensure your income falls within the guidelines, establish a reasonable credit history, demonstrate loan repayment ability, and select a property that meets the program’s standards.

It is important to consult with a reputable lender who understand the USDA Maine Loan Requirements to guide you through the application process and provide personalized advice based on your circumstances. With determination, proper preparation, and the necessary documentation, you can navigate the USDA Maine loan requirements and make your dream of rural homeownership a reality.

Maine USDA RD Loans are our specialty. We have helped many first time buyers and previous home owners achieve homeownership with no money down and closing cost paid by the seller. If you would like to apply for a Maine USDA Home Loan today with no cost or obligation, please reach out today via phone, email or text! You can apply online right from your phone here.

– Seth

Seth Jacobs is a Branch Manager with LeaderOne Home Loans of Maine.

We are not the U.S. Department of Agriculture. If you wish to contact them you can do so by visiting their site at LeaderOne Home Loans originates USDA RD Mortgage Loans and is here to help navigate borrowers through the USDA Maine Loan Requirements to qualify for USDA RD Commitment. NMLS 249610