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 Minnesota don’t work in the same manner as USDA Guaranteed Loans in Minnesota. The USDA Guaranteed Loan Program is a more popular option and can be used for a wider range of applicant incomes.Minnesota USDA Direct Loans are 100% financing mortgages. Unlike Guaranteed USDA Loans, applicants must have low or very low income to qualify for Direct Loans.

Minnesota 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 $71,306 in Minnesota, 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 MN are eligible for USDA Direct Loans?

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

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

Yes, other low down payment mortgage options, and no down payment mortgage options are available in Minnesota besides USDA Direct Loans. You can start by looking into USDA Guaranteed Loans in Minnesota, FHA Loan in Minnesota, or if you’re a veteran or qualified family member, VA Loans in Minnesota. You may also want to research if any helpful Minnesota 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 Minnesota. Search home loan limits for your area below.

Minnesota USDA Direct Loan Limits

Direct Loan Limit
Aitkin $251,862
Anoka $293,480
Becker $251,862
Beltrami $251,862
Benton $251,862
Big Stone $251,862
Blue Earth $251,862
Brown $251,862
Carlton $251,862
Carver $293,480
Cass $251,862
Chippewa $251,862
Chisago $293,480
Clay $251,862
Clearwater $251,862
Cook $251,862
Cottonwood $251,862
Crow Wing $251,862
Dakota $293,480
Dodge $251,862
Douglas $251,862
Faribault $251,862
Fillmore $251,862
Freeborn $251,862
Goodhue $251,862
Grant $251,862
Houston $293,480
Hubbard $251,862
Isanti $293,480
Itasca $251,862
Jackson $251,862
Kanabec $251,862
Kandiyohi $251,862
Kittson $251,862
Koochiching $251,862
Lac qui Parle $251,862
Lake $251,862
Lake of the Woods $251,862
Le Sueur $293,480
Lincoln $251,862
Lyon $251,862
Mahnomen $251,862
Marshall $251,862
Martin $251,862
McLeod $251,862
Meeker $251,862
Mille Lacs $293,480
Morrison $251,862
Mower $251,862
Murray $251,862
Nicollet $251,862
Nobles $251,862
Norman $251,862
Olmsted $251,862
Otter Tail $251,862
Pennington $251,862
Pine $251,862
Pipestone $251,862
Polk $251,862
Pope $251,862
Red Lake $251,862
Redwood $251,862
Renville $251,862
Rice $251,862
Rock $251,862
Roseau $251,862
Scott $293,480
Sherburne $293,480
Sibley $293,480
St. Louis $251,862
Stearns $251,862
Steele $251,862
Stevens $251,862
Swift $251,862
Todd $251,862
Traverse $251,862
Wabasha $251,862
Wadena $251,862
Waseca $251,862
Watonwan $251,862
Wilkin $251,862
Winona $251,862
Wright $293,480
Yellow Medicine $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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