What he/she is probably saying is that you can only be approved to purchase, with a contingency that your current home is sold first. This is often the case, as many people cannot afford to own two homes. If you find a house on which the seller is willing to accept a contingency offer, then your house has to sell (have a contract) for everything to work. Typically, you would set your current home's closing first, followed by the new home's closing. This is often done back to back on the same day. It requires some coordination, but it is common practice.

On the other hand, If you qualify for a loan on your own, then you should be able to use the rural development program, assuming the house you choose meets the location and other requirements. Can you ask your loan officer this question?