Oklahoma USDA Loan

How to Get a No-Money Down USDA Loan in Oklahoma

From vast prairies and rolling farmland to quiet small towns and scenic rivers, rural Oklahoma offers a blend of open spaces and rich natural beauty. With national parks, winding trails, and a deep connection to its agricultural roots, the state’s rural areas provide a peaceful escape and a strong sense of community.

Many people in Oklahoma want to become homeowners, but they may be concerned that their income or credit scores aren’t high enough to qualify for a Conventional mortgage. They may also worry that they don’t have enough money saved for a down payment and closing costs.

USDA loans might be the solution. USDA loans do not require a down payment, often offer lower mortgage interest rates, and are available to buyers with lower incomes and credit scores.

U.S. Department of Agriculture (USDA) loans are designed to help homebuyers in eligible rural areas of the country and promote homeownership in those communities.

Homebuyers may not realize these loans aren’t limited to farms or rural areas. Many USDA-eligible properties are located in the suburbs just outside major cities. You can check out the USDA’s interactive map of the country to see if the property you hope to purchase is eligible for a USDA loan.

The USDA created these loans in 1991 to increase homeownership opportunities for low- and moderate-income borrowers. Borrowers in Oklahoma can use USDA loans to purchase eligible single-family homes, condos, and townhomes. The mortgages can be used for existing homes, constructing a new home, or renovating a property.

USDA loans are government-backed loan options, which means that the mortgages are guaranteed by the federal government. The same way FHA loans are insured by the Federal Housing Administration, USDA loans are insured by the USDA.

This allows lenders to offer these loans with 100% financing and no loan limitations. Other loans have limits on how much a buyer can borrow. For instance, FHA loans have maximums that are based on the county the property is located in. The amount of money a buyer can borrow using a USDA loan is limited by the buyer’s eligibility, not a set loan limit.

USDA and U.S. Department of Veterans Affairs (VA) loans are the only types of government-backed mortgages that do not require a down payment. FHA loans generally require at least 3.5% down, while Conventional loans require 3% down. USDA loans and FHA loans are often popular with first-time homebuyers.

However, USDA loans are only available as fixed-rate mortgages. This means the interest rate will not change over the life of your mortgage, unlike an adjustable-rate mortgage. If mortgage rates fall, borrowers may be eligible to refinance their loans into lower rates.

Oklahoma USDA loan benefits

USDA loans often have more flexible terms and qualifications than other types of mortgages, such as Conventional loans. This can make them particularly helpful to people who may have trouble qualifying for a traditional home loan.

Here are some of the benefits of getting a USDA loan in Oklahoma:

• No down payment: 100% financing is available for qualified buyers using USDA loans. However, the amount of money you put down can impact your mortgage rate. If you can make a larger down payment, you may be able to lower your interest rate.
• More flexible credit scores: Some lenders accept credit scores as low as 580 for USDA loans. However, many lenders want to see a minimum score of 620.
• Lower mortgage interest rates: USDA loans often offer lower mortgage interest rates than FHA and Conventional loans. If your credit score is high, you may be offered a lower rate.
• Closing cost assistance: Borrowers may be able to receive financial assistance to help cover closing costs. This assistance can be in the form of gift funds from family members, seller concessions, or an increase in your USDA loan amount. In that last example, borrowers may be able to roll closing costs into their loan. This may mean they don’t owe as much money upfront.
• Accessibility benefits: Funds from the loan can be used to improve accessibility for homeowners with disabilities.
• Repairs and appliances: When the value of the home exceeds the purchase price, borrowers may be able to finance many home-related items in the loan amount, such as appliances, home repairs (roof, windows, heating/air, etc.), among other things.
• No set minimum or maximum loan limits: USDA loan limits depend on the location and income eligibility of the borrower.
• No private mortgage insurance: Borrowers who take out USDA loans do not pay private mortgage insurance (PMI).

However, you will need to pay a guarantee fee that represents about 1% of the loan amount due at closing. You will also be charged an annual fee of about 0.35% of your loan amount annually. 

• No age restrictions: Homebuyers 18 and older are eligible to apply for a USDA loan. 
• No occupational requirements: There are no job requirements to obtain a USDA loan. You don’t need to have worked in a certain type of profession to be eligible.
• You can refinance a USDA loan: As long as your credit and loan payments are in good standing, you may be able to refinance a USDA loan to lower your monthly payments.

Oklahoma USDA loan requirements

Since USDA loans are backed by the government, some of the requirements to qualify for the loan may be more flexible than other types of mortgages. However, there are some specific criteria you will need to meet to be approved.

• A credit score of 580 or higher: The minimum credit score for a USDA loan is 580, although some lenders may require a score of at least 620. Your credit score and debt-to-income ratio (DTI) are linked, so lenders may require a higher credit score if you have a higher DTI.

Lenders generally consider a higher credit score better than a lower one. Borrowers with higher scores are viewed as less risky and not as likely to default on their mortgages because they are unable to make their monthly payments.

• Strong credit history: Your credit history is an indication of whether you will pay your mortgage on time. Lenders want to know that you have a track record of paying down your debt every month, such as credit card bills. That’s why it’s important not to have any unpaid bills that have been moved to collections in the last 12 months.
• Debt-income-ratio (DTI): Your DTI ratio is calculated by dividing your total monthly debt by your monthly gross (before taxes) income. A lower DTI ratio indicates a better balance between debt and income, making it more likely for a lender to approve a loan or credit application. Lenders usually want to see a DTI of between 41% and 44%, depending on your credit score and other factors.
• Property must be your primary residence: USDA loans may not be used for investment properties, rental properties, or second or vacation homes.
• Property must be in an eligible area: The USDA provides an interactive map of the areas across the U.S. that are eligible for USDA loans. Using their website, you can search for the address of the property you want to finance and you can find out if it is located in an eligible area.

The majority of the state of Oklahoma is eligible for USDA loans, including several suburbs of Oklahoma City such as Newcastle, Piedmont, and Tuttle.

• Property must be appraised: Your home must be appraised to ensure you’re not asking for a large loan for a property that isn’t worth as much. Along with figuring out the value of the property, an appraisal is also required to make sure that the property meets the specific standards set by the USDA. These include things like that the property must be up to code, must have working plumbing and heating, and can’t have damage like broken windows.
• You must be a U.S. citizen, U.S. non-citizen national, or a Qualified Alien
• Eligible income limit: USDA loans are specifically for low-to moderate-income households. Income requirements vary by county. However, in general, the borrower’s income cannot be more than 115% of the median income of the area. You can check your income eligibility here.

The median household income in Oklahoma was about $67,300 in 2023, according to the U.S. Census Bureau.

• Reliable income source: Lenders will want to see evidence that you are employed and have the financial means to pay off the loan. In general, you will be asked to show at least 12 months of proof of income. These are generally pay stubs and W-2 forms.
• Ability to pay associated fees and costs: This will include lender fees, a guarantee fee, and closing costs. The guarantee fee is paid up front and is based on the total loan amount. This fee is only paid once, and you may be able to finance it as part of the loan. There is also an annual funding fee that the borrower must pay to the USDA.

Closing costs for USDA loans are similar to those of other mortgages. They can include a home appraisal fee, service fees, and taxes. Closing costs are typically 2% to 6% of the loan amount.

• Cannot use a USDA loan for business: The money from a USDA loan may not be used for investing or other business purposes.

In addition to these qualifications, your individual lender may have their own set of requirements.

USDA income limits for Oklahoma

The 2025 income limits for the five metropolitan areas with the most residents range from:

Oklahoma City, OK: $44,750-$112,450 for very low to moderate income for 1 person

Tulsa, OK: $43,300-$112,450 for very low to moderate income for 1 person

Fort Smith, AR-OK: $33,250-$112,450 for very low to moderate income for 1 person

Lawton, OK: $35,600-$112,450 for very low to moderate income for 1 person

Payne County, OK: $38,100-$112,450 for very low to moderate income for 1 person

Metros generally include the main city and surrounding towns and suburbs. However, not all properties in these metros are eligible for USDA loans.

How to apply for a USDA loan in Oklahoma

USDA loans can either be issued directly by the USDA or by a lender that chooses to participate in the loan program. Your eligibility will depend on where the home you hope to purchase is located, your credit score, amount of debt, household income, and the condition of the property.

In general, USDA home loans are tailored for low- to middle-income earners who earn no more than 115% of the area’s median income, based on their household size.

If you hope to secure a USDA loan, these are the steps you should take:

1. Reach out to a lender
2. Obtain a mortgage pre-approval for loan
3. Check the loan requirements
4. Verify your eligibility
5. Find a home you want to purchase
6. Verify that the property meets the USDA guidelines for eligibility
7. Your lender will add the final details, including the property details, to your loan file and submit it to the USDA for approval
8. You close on the home!

To find out if a USDA home loan is the right choice for you, contact New American Funding today.

Types of Oklahoma USDA loans

The USDA offers several different types of loan programs for homebuyers in Oklahoma.

USDA Direct loans: These loans are issued directly by the USDA and are not available through a lender. They are designed for low-income households and can offer mortgage interest rates as low as 1%.

USDA loan guarantees: These mortgages are similar to VA loans and FHA loans. A lender partners with the USDA and issues the mortgage. Then the USDA backs it. The USDA guarantee allows lenders to offer lower interest rates. The lender will underwrite the loan, but final approval will come from the USDA.

USDA home improvement loans: These loans are designed for very low-income homeowners to use to improve an existing home through repairs or renovations. Seniors may be able to use the loan to remove health and safety hazards on their properties. The maximum loan amount is $40,000 for eligible borrowers with a possible grant of $10,000 for a total of $50,000 in assistance.

Oklahoma USDA loan FAQs

What's the difference between a USDA loan and an FHA loan?

A USDA loan and an FHA loan are both government-backed mortgages. The main difference is that the USDA loan is backed by the U.S. Department of Agriculture, while the FHA loan is backed by the Federal Housing Administration, which is part of the U.S. Department of Housing and Urban Development.

The loans are often used in different kinds of communities. A USDA loan is intended mainly for borrowers who wish to buy in defined rural or farmable areas, while an FHA loan does not exclude specific geographic areas.

In addition, buyers who use a USDA loan do not need to make a down payment. FHA borrowers must put down at least 3.5%. The exact amount will depend on their credit scores.

What disqualifies a home from USDA financing?

Homes can be denied USDA financing for many reasons, including the location and the condition of the home. If the home is not in one of the USDA-eligible areas, it will not qualify for a loan. Some homes may also be in such a state of disrepair that the USDA will not issue a loan. This may be the case if the heating or plumbing doesn’t work, the roof needs to be replaced, or the home is unsafe.

Do USDA loans have lower interest rates?

Yes, USDA loans typically have lower interest rates than other government-backed loans, like FHA, or traditional mortgages. Since the lenders are protected from the homeowner defaulting on the loan, they may be able to offer lower mortgage rates.