For a home to meet the USDA's rural definition, it must be in an area that's located outside of a town or city and not associated with an urban area
The USDA's guidelines on the definition of a qualified "rural area" includes:
A population that doesn't exceed 10,000, or
A population that doesn't exceed 20,000; is not located in a metropolitan statistical area (MSA); and has a serious lack of mortgage credit for low- to moderate-income families, or
Any area that was once classified as "rural" or a "rural area" and lost its designation due to the 1990, 2000 or 2010 Census may still be eligible if the area's population does not exceed 35,000; the area is rural in character; and the area has a serious lack of mortgage credit for low- and moderate-income families.
These guidelines are generous in the sense that many small towns and suburbs of metropolitan areas fall within the requirements.