USDA Loans Around Austin: Which Texas Towns Qualify in 2026
Austin’s housing costs have pushed a lot of first-time buyers to look at the outer ring of the metro: Georgetown, Kyle, Buda, Leander, Lockhart, Wimberley. That geographic shift matters for mortgage qualification, because some of those towns qualify for USDA Guaranteed loans, which offer 100% financing for eligible borrowers.
USDA loans aren’t just for farms. The USDA Guaranteed Loan Program (officially the Section 502 Guaranteed Loan) is designed for moderate-income buyers purchasing in rural or smaller suburban communities. Plenty of areas within commuting distance of Austin meet the criteria.
Here’s a plain-language breakdown of how USDA loans work, which communities around Austin are currently eligible, and what the income limits look like for 2026.
How USDA Loans Work
USDA Guaranteed loans are made by approved private lenders and backed by the USDA Rural Development program. The main advantages:
- Zero down payment: No down payment required. You finance 100% of the purchase price.
- Low mortgage insurance: USDA charges an upfront guarantee fee of 1% of the loan amount (financed into the loan) and an annual fee of 0.35% of the outstanding balance. Both are lower than FHA’s MIP structure for most borrowers.
- Competitive rates: USDA loans use conventional-quality underwriting; rates are typically in line with conforming loans.
- No set loan limit: The USDA program itself doesn’t impose a hard loan cap, but your income and DTI (debt-to-income ratio) constrain the purchase price in practice.
The tradeoffs: the property must be in a USDA-eligible area, your household income must fall within program limits, and the home must be your primary residence. Investment properties and second homes are excluded.
Which Towns Near Austin Are USDA-Eligible?
USDA eligibility is determined by census tract, not by city name. A town can have some tracts that qualify and some that don’t. Boundaries shift periodically as the Census Bureau updates population data.
As of 2026, areas within reasonable driving distance of Austin that have had USDA-eligible tracts include:
- Bastrop County: Smithville, portions of Bastrop city limits, portions of Elgin
- Caldwell County: Lockhart, Luling, surrounding rural areas
- Lee County: Giddings and surrounding area
- Fayette County: La Grange, Schulenburg
- Llano County: Llano, portions of the Highland Lakes area
- Burnet County: Portions of Marble Falls, Burnet, Lampasas
- Milam County: Cameron, Rockdale
Communities that were USDA-eligible but now exceed rural population thresholds and typically no longer qualify: Pflugerville, Round Rock core, Georgetown core, Cedar Park, Kyle, Buda. Those markets grew past the rural designation threshold as the Austin metro expanded. Fringe areas of those cities may still have eligible tracts; the only way to confirm is to run the specific property address through the USDA eligibility map.
The USDA’s online eligibility tool lets you enter any address and confirm eligibility in seconds. Before getting pre-approved for a USDA loan, check the specific property address. Never assume based on the town name alone.
Income Limits for USDA Loans Near Austin
USDA income limits depend on household size and the county where the property is located. The program targets moderate-income borrowers, and the limits are higher than many people expect.
For 2026, approximate income limits for USDA’s Guaranteed Loan Program in Central Texas counties (for households of 1 to 4 persons; limits increase for 5 to 8 person households):
- Bastrop County: approximately $112,450
- Caldwell County: approximately $110,650
- Llano County: approximately $112,450
- Burnet County: approximately $110,650
- Milam County: approximately $103,500
These are approximate and subject to annual updates by USDA. Travis County itself is not included because most of the county is urbanized and not USDA-eligible territory.
One important note on how USDA calculates income: it uses the entire household’s income, not just the borrowers on the loan. If anyone living in the home earns income, that income counts toward the limit even if they are not on the mortgage application.
USDA vs. FHA vs. Conventional 97: Which Fits Your Situation?
If the property qualifies and your income is within limits, USDA is often the strongest option for buyers who want to minimize upfront cash. A quick comparison for a $350,000 purchase:
- USDA: $0 down, roughly $3,500 upfront guarantee fee (financed), approximately $102/month ongoing fee
- FHA (3.5% down): $12,250 down, roughly $6,125 upfront MIP (financed), approximately $203/month MIP
- Conventional 97 (3% down): $10,500 down, no upfront fee, PMI varies by credit score
USDA wins on cash needed to close. The tradeoff is that it limits your property selection to eligible areas, which rules out most of the core Austin metro. If you’re set on a property in Round Rock or Cedar Park, USDA likely won’t apply; FHA or Conventional 97 are your low-down-payment options instead.
For a look at how down payment requirements vary across Austin price points, see our breakdown of down payment realities by price tier in Travis County.
The Pre-Approval Process for USDA Loans
USDA pre-approval works similarly to other mortgage types: you’ll provide pay stubs, W-2s, tax returns, bank statements, and allow a credit check. The lender runs your application through their automated system, and USDA Rural Development reviews the file and issues a conditional commitment.
USDA loans take slightly longer to close than conventional or FHA loans because of that USDA review stage. Plan for 35 to 45 days to close, compared to the 25 to 30 days typical for conventional loans. Build that into your offer timeline so you don’t face contract date pressure.
Getting the right documents together up front speeds the process. See the five documents your loan officer will ask for first, which apply equally to USDA applications. When you’re ready to move forward, understanding where pre-qualification ends and pre-approval begins will help you move confidently in a competitive offer situation.
Frequently Asked Questions
Do USDA loans require any down payment in Texas?
No. USDA Guaranteed loans offer 100% financing, so no down payment is required. You will still need to cover closing costs unless you negotiate seller concessions or roll eligible closing costs into the loan. The 1% upfront guarantee fee can typically be financed into the loan balance as well.
Is Georgetown or Round Rock USDA-eligible in 2026?
Most of Georgetown and Round Rock lost USDA eligibility as those cities grew past rural population thresholds. Some fringe tracts near those cities may still qualify. The only reliable way to verify is to enter the specific property address into the USDA’s eligibility map tool. Never assume based on the city name; tract-level eligibility can vary within the same zip code.
What is the income limit for USDA loans in Bastrop County?
For 2026, the approximate income limit for a 1 to 4 person household in Bastrop County is around $112,450. The limit increases for larger households. USDA counts all household income, including income from anyone living in the home even if they are not on the loan application. USDA updates these limits annually, so confirm with your lender at the time of application.
How long does it take to close a USDA loan?
USDA loans typically close in 35 to 45 days, compared to 25 to 30 days for conventional loans. The extra time comes from the USDA Rural Development review stage, which adds roughly one to two weeks to the timeline. When you write an offer, make sure the closing date allows for this extended window to avoid pressure at the end of the contract period.
Can I use a USDA loan to buy in the Texas Hill Country?
Many Texas Hill Country communities qualify, including areas in Burnet County, Llano County, and Kimble County. Smaller towns with populations below rural thresholds are generally eligible. Run any specific address through the USDA eligibility tool to confirm, since eligibility can vary even within a single county or town.
Does USDA mortgage insurance cancel like PMI on a conventional loan?
The USDA annual fee of 0.35% of the outstanding balance continues for the life of the loan and does not cancel automatically when you reach 20% equity. It is substantially lower than FHA’s annual MIP of 0.55% for most borrowers. Refinancing to a conventional product once you reach 20% equity and qualify on credit terms is how most USDA borrowers eventually eliminate the ongoing fee.
If you’re looking at properties outside the core Austin market and want to know whether USDA fits your situation, schedule a discovery call and we’ll review the specific address and your income picture together.
Ferrando Financial LLC | NMLS# 2403080 | Licensed in Texas. This content is for educational purposes only and does not constitute a commitment to lend. Loan approval is subject to credit, income, and property qualification. USDA income limits and eligible area boundaries are subject to annual updates by USDA Rural Development; confirm current eligibility with your lender at time of application. Payment figures shown are illustrative and not a rate quote. Sources: USDA Rural Development Section 502 Guaranteed Loan Program, FHFA 2026 conforming limits.
