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

Tennessee 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 $53,320 in Tennessee, 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 TN are eligible for USDA Direct Loans?

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

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

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

Tennessee USDA Direct Loan Limits

Direct Loan Limit
Anderson $251,862
Bedford $251,862
Benton $251,862
Bledsoe $251,862
Blount $261,600
Bradley $251,862
Campbell $251,862
Cannon $427,800
Carroll $251,862
Carter $251,862
Cheatham $427,800
Chester $251,862
Claiborne $251,862
Clay $251,862
Cocke $251,862
Coffee $251,862
Crockett $251,862
Cumberland $251,862
Davidson $427,800
Decatur $251,862
DeKalb $251,862
Dickson $427,800
Dyer $251,862
Fayette $251,862
Fentress $251,862
Franklin $251,862
Gibson $251,862
Giles $251,862
Grainger $251,862
Greene $251,862
Grundy $251,862
Hamblen $251,862
Hamilton $251,862
Hancock $251,862
Hardeman $251,862
Hardin $251,862
Hawkins $251,862
Haywood $251,862
Henderson $251,862
Henry $251,862
Hickman $427,800
Houston $251,862
Humphreys $251,862
Jackson $251,862
Jefferson $251,862
Johnson $251,862
Knox $261,600
Lake $251,862
Lauderdale $251,862
Lawrence $251,862
Lewis $251,862
Lincoln $251,862
Loudon $261,600
Macon $427,800
Madison $251,862
Marion $251,862
Marshall $251,862
Maury $427,800
McMinn $251,862
McNairy $251,862
Meigs $251,862
Monroe $251,862
Montgomery $251,862
Moore $251,862
Morgan $251,862
Obion $251,862
Overton $251,862
Perry $251,862
Pickett $251,862
Polk $251,862
Putnam $251,862
Rhea $251,862
Roane $251,862
Robertson $427,800
Rutherford $427,800
Scott $251,862
Sequatchie $251,862
Sevier $251,862
Shelby $251,862
Smith $427,800
Stewart $251,862
Sullivan $251,862
Sumner $427,800
Tipton $251,862
Trousdale $427,800
Unicoi $251,862
Union $251,862
Van Buren $251,862
Warren $251,862
Washington $251,862
Wayne $251,862
Weakley $251,862
White $251,862
Williamson $427,800
Wilson $427,800

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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