USDA Loans in the Hill Country: Zero Down When the Address Qualifies

How a zero-down USDA loan works

USDA's Section 502 guaranteed loan is designed for moderate-income buyers in eligible rural areas, and it finances 100% of the purchase price, so qualified buyers can close with no down payment at all. The trade-off is the guarantee fee structure: a one-time upfront fee of 1.0% of the loan amount, usually financed, so about $4,000 on a $400,000 purchase, plus an annual fee of 0.35% of the outstanding balance, roughly $117 a month in year one on that same loan and declining as the balance drops. The home must be your primary residence, lenders typically want a credit score in the mid-600s or higher, and you pay it back on a 30-year fixed like a conventional loan. Hill Country sellers have seen these loans, so it is not an exotic file, but you do want a lender who closes them regularly, because the process has its own timeline and paperwork.

The 2026 income limits that matter near San Antonio

USDA sets income limits county by county, and for fiscal year 2026 Kendall County and Comal County sit at the standard Texas level: $122,800 for a household of one to four people and $162,100 for five to eight, counting total household income, not just the primary earner's paycheck. Bexar County's limits run higher because of the metro area calculation, which means a family whose income is above USDA's cap inside San Antonio can become eligible the moment the address moves to a qualifying Hill Country property. The limits change every fiscal year, so the number that matters is the one in effect the month you apply, and your lender recertifies the household income as part of the file.

Eligibility is about the address, not the ZIP code

USDA eligibility follows the program's definition of rural, which excludes the most urbanized areas, so most of San Antonio's city limits and its denser suburbs do not qualify, while unincorporated Hill Country communities and the edges of smaller towns frequently do. That is why the same ZIP code can hold eligible and ineligible homes a few blocks apart. The only honest way to know is to run the exact property through USDA's official eligibility map, and I check addresses for clients as part of the search, so you are not guessing while you shortlist communities. A home that misses by a block is a normal, quick answer, not a dead end for the whole route.

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Who gets the most out of USDA in the Hill Country

• Out-of-state relocators who want to keep cash for moving costs, furniture, and a reserve instead of tying it up in a down payment.
• Downsizers and empty nesters selling a paid-off home who want to rightsize without re-leveraging everything they have.
• Families with strong income but modest savings, where zero down beats saving toward 10% or 20% while paying today's rents.
• Military families PCSing to JBSA who plan to live in the surrounding counties and commute in.
• Buyers already looking around Boerne-adjacent land, New Braunfels, Castroville, and the unincorporated areas between them.

The honest trade-offs

• The annual fee does not cancel at 20% equity the way conventional PMI does; it stays for the life of the loan, so the longer you hold the loan, the more the math tilts toward a later conventional refinance.
• Eligibility is per address, per USDA's map, and the map can shift with redraws, so re-verify the address before you build expectations on it.
• The property must meet USDA home standards and appraise at or above the purchase price, which works in your favor as a negotiating tool, not against it.
• Not every lender offers USDA loans, so you may need to shop lenders rather than taking the first pre-approval you receive.
• USDA is not available for investment properties, second homes, or fixer-uppers in their current state.

Frequently asked questions