USDA Direct Loans (also known as USDA Section 502 Direct Loans) are a mortgage program that assists low- and very-low income individuals buy decent, safe, and clean housing in rural areas. This is done through payment assistance which increases a borrower’s ability to repay. That payment assistance can be best described a subsidy which lowers the mortgage payment for short periods. The amount of assistance largely depends on the adjusted family income. USDA Direct Home Loans in Alabama don’t work in the same manner as USDA Guaranteed Loans in Alabama. The USDA Guaranteed Loan Program is a more popular option and can be used for a wider range of applicant incomes.Alabama USDA Direct Loans are 100% financing mortgages. Unlike Guaranteed USDA Loans, applicants must have low or very low income to qualify for Direct Loans.

Alabama USDA Direct Loan Requirements

USDA Direct Loans are a mortgage program available for low-income individuals to buy homes in rural areas. USDA defines low- or very low income as anything between 50% and 80% of the Area Median (AMI). The statewide median income was recently reported as $50,536 in Alabama, but this number may differ from one county to the next. For home buyers that meet those requirements, USDA Loans are a zero-down mortgage, meaning there’s no down payment. To be eligible, applicants must also meet the following requirements:

  • You don’t presently have decent, clean, sanitary and safe housing.
  • You can’t get another mortgage from a different source with terms and conditions reasonably expected to be met.
  • The subject property must be your primary residence.
  • You must be legally eligible for a mortgage.
  • You must meet citizenship requirements or non-citizen requirements.
  • You must be eligible for participation in federal programs.

In addition, the subject property must meet the following requirements.

  • It must be moderately-sized for that area.
  • The home cause can’t exceed the area’s applicable loan limit.
  • The home can’t be designed for the production of income.

How much can I borrow with a USDA Direct Mortgage?

Up to the maximum loan limit, the amount of money that an applicant’s eligible for depends on their ability to pay it back. When evaluating home loan applicants for Direct home loans, Rural Development considers income, assets, debt, and payment assistance. And remember, you can’t borrow more than the local USDA loan limit for the county where the home is located, no matter what your repayment ability may be.

What areas in AL are eligible for USDA Direct Loans?

The subject property must be in an approved rural area. You can search specific addresses in Alabama for USDA eligibility here.

Are there other zero down mortgage options or low down payment mortgages in Alabama?

Yes, other low down payment mortgage options, and no down payment mortgage options are available in Alabama besides USDA Direct Loans. You can start by looking into USDA Guaranteed Loans in Alabama, FHA Loan in Alabama, or if you’re a veteran or qualified family member, VA Loans in Alabama. You may also want to research if any helpful Alabama down payment assistance programs may be available.

Search all USDA Guaranteed Loan Limits (Direct and Guaranteed Loans)
Learn about today’s USDA Loan Requirements

Direct Loans aren’t as popular as USDA Guaranteed Loans, which accommodate a wider range of borrower qualifications. The USDA sets specific maximum mortgage limits for Direct Loans in Alabama. Search home loan limits for your area below.

Alabama USDA Direct Loan Limits

Area
Direct Loan Limit
Autauga $251,862
Baldwin $251,862
Barbour $251,862
Bibb $251,862
Blount $251,862
Bullock $251,862
Butler $251,862
Calhoun $251,862
Chambers $251,862
Cherokee $251,862
Chilton $251,862
Choctaw $251,862
Clarke $251,862
Clay $251,862
Cleburne $251,862
Coffee $251,862
Colbert $251,862
Conecuh $251,862
Coosa $251,862
Covington $251,862
Crenshaw $251,862
Cullman $251,862
Dale $251,862
Dallas $251,862
DeKalb $251,862
Elmore $251,862
Escambia $251,862
Etowah $251,862
Fayette $251,862
Franklin $251,862
Geneva $251,862
Greene $251,862
Hale $264,960
Henry $251,862
Houston $251,862
Jackson $251,862
Jefferson $251,862
Lamar $251,862
Lauderdale $251,862
Lawrence $251,862
Lee $251,862
Limestone $251,862
Lowndes $251,862
Macon $251,862
Madison $251,862
Marengo $251,862
Marion $251,862
Marshall $251,862
Mobile $251,862
Monroe $251,862
Montgomery $251,862
Morgan $251,862
Perry $251,862
Pickens $264,960
Pike $251,862
Randolph $251,862
Russell $251,862
Shelby $251,862
St. Clair $251,862
Sumter $251,862
Talladega $251,862
Tallapoosa $251,862
Tuscaloosa $264,960
Walker $251,862
Washington $251,862
Wilcox $251,862
Winston $251,862

More USDA Loan Resources

USDA Direct Loan Income Limits (Low Income)
USDA Direct Loan Limits (Low Income)

All USDA Loan Limits
All USDA Loan Income Limits
USDA Loan Requirements
USDA Loan Programs
USDA Loan Calculator

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Maximum Loan Amounts
Alabama USDA Direct Loan Limits

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Maximum Applicant Income
Alabama USDA Direct Income Limits

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