Understanding USDA Loan Income Limits and Eligibility

Nice rural homeThe USDA income limits for a USDA loan are lower than for other types of loans. This is because the USDA program is designed to help low- and moderate-income families buy homes in rural areas.

In most areas of the country, a family with 1-4 members must have an annual income under $91,900 in order to qualify for USDA eligibility, and a home with 5-8 members must have an annual income under $121,300.

USDA Loans are available to low- and moderate-income individuals and families who are looking to buy a home in a rural area. There are income limits that vary depending on the size of your household and the county where you're looking to purchase a home.

Because there is no need for a down payment, the loan is referred to as a “zero-down loan,” and the mortgage insurance costs are often cheaper than those associated with conventional loans or FHA loans. The USDA's interest rates are typically lower than those offered by private lenders.

What are USDA Income Limits?

USDA income limits are determined by your household size. To be eligible for a USDA loan, your household must fall below the maximum income limits for your area. These income limits vary by county and state, so you'll need to check the USDA website for the most up-to-date information.

If your household does not meet the income limits for your area, you may still be eligible for a USDA loan if you have qualified for a special exception. Special exceptions are available for certain circumstances, such as if you are disabled or have a family member who is disabled. You can find more information about special exceptions on the USDA website.

Are USDA Income Limits Gross or Net?

When it comes to income limits for USDA home loans, there seems to be some confusion regarding whether these limits are based on gross income or net income.

The answer is that the limits are actually based on gross income, which is the total amount of income earned before taxes and other deductions are taken out. This is different from net income, which is the amount of money that you take home after taxes and other deductions have been made.

Household Income Limits for USDA Loans

There are a few things to consider when determining the household income limits for a USDA loan. First, you need to determine the size of your household. The USDA defines a household as any individual or group of individuals who are related by blood, marriage, adoption, or other legal means.

Next, you'll need to look at the median income for your area. The USDA has income limits for each county in the United States. To find the limit for your county, you can look up the table on their website or use their online tool.

Finally, you'll need to take into account any other sources of income that your household may have. This includes things like child support, alimony, and disability payments.

If you have multiple sources of income, you'll need to add them all up to get your total household income. Once you have all of this information, you can compare it to the USDA's income limits to see if you qualify for a loan. Remember, these limits are just guidelines—so even if your income is slightly above the limit, you may still be able to get a loan depending on your circumstances.

Maximum Income USDA Loan

Maximuum income for a USDA loanThe maximum income that may be used to qualify for a USDA loan is 115% of the local median income (AMI). That means the total income of your household occupants can't be more than 15% higher than the median income in the area in which you reside.

The real monetary amount varies depending on the region as well as the number of people living in a family. For example, the USDA permits a larger income for families with five or more people than it does for homes with one to four members.

In addition, the USDA enables purchasers to deduct from their household income certain expenditures related to the care of their children who are less than 12 years old. You would still be qualified for the program even if your annual childcare expenditures were verified to be $5,000 despite the fact that your family income was $2,000 more than the maximum allowed for that category.

In addition, the USDA raises the income limitations in regions where employees normally make more money.

USDA Debt-to-Income Ratio Limits

The USDA debt-to-income ratio limits are set at 35% for the house payment and 41% for the total debt including the house payment. If your debt is higher than these amounts, you may still qualify for a USDA Loan if your lender can justify your ratios.

How Are USDA Income Limits Determined?

Income limits for a USDA loan are determined by your household size and the median income in your area. To find out the maximum income allowed for your household size in your area, you can visit the USDA website or speak to a USDA loan specialist.

In order to be eligible for a USDA loan, your household income must be less than 80% of the median income in your area. The median income is different in every county and is based on the most recent census data. For example, in Los Angeles County, California, the 2018 median income for a 4-person household is $73,900.

So, if your household earns less than $59,120 annually, you may be eligible for a USDA loan. To see what the median income is in your county, you can visit the USDA website or speak to a USDA loan specialist.

Credit Score Requirements for a USDA Mortgage

Credit score for a USDA loanBecause the USDA does not have a strict requirement for a borrower's minimum credit score, prospective borrowers with lower scores have a chance of being approved for a USDA-backed mortgage loan.

The majority of lenders that are recognized by the USDA need a credit score of 640 or higher as the minimum qualifying score for applicants. However, there are certain lenders that will go lower than 640.

It is still feasible to submit an application for a USDA loan and have it accepted, even if your credit score is lower than 640. The United States Department of Agriculture (USDA) gives lenders the option to manually underwrite and approve USDA house loans at the lender's discretion. After your loan has been cleared by your lender, the USDA will conduct a final evaluation of your loan to determine whether it has been approved.

What is the Maximum Loan Amount for a USDA loan?

In contrast to the FHA program, the USDA loan program does not impose any maximum loan amounts. There are income restrictions placed on applicants, but there are none placed on the maximum loan amount.

This is due to the fact that the program is designed to assist borrowers with low to moderate incomes in becoming homeowners. Instead, the amount of your loan will be established based on the particulars of your current financial status as well as the region in which you want to make your purchase.

Rotating question markFAQs About USDA Income Limits

Q. Is it hard to get approved for a USDA loan?

A. It is not hard to get approved for a USDA loan. In order to be eligible, you must meet the income limits and have an acceptable credit history. The USDA loan income limits vary by county and household size.

For example, in order to qualify for a USDA loan in Los Angeles County, California, you must have a household income of less than $105,500 for a 1-4 person household. To see the income limits for other counties in California, visit the USDA website. If you have an acceptable credit history, you will likely be approved for a USDA loan.

Q. What counts as income for a USDA loan?

A. There are a few things that count as income for the purposes of a USDA loan. Your gross monthly income, before taxes are taken out, is one factor that is considered. This includes income from all sources, whether it is wages from a job, child support payments, or alimony.

Another thing that is considered is your average monthly overtime pay and bonuses. This is to give a more accurate picture of your true monthly earnings potential. Lastly, if you have any other reliable forms of income, such as Social Security disability benefits or Veterans Affairs benefits, this will also be factored in.

Q. What is the difference between an FHA and a USDA loan?

A. The Federal Housing Administration (FHA) and the United States Department of Agriculture (USDA) offer different loan programs that can help low- and moderate-income families finance homes of their own. Here are some key differences between FHA and USDA loans:

Income limits: USDA loans have income limits that vary by region. In general, households with one to four members can qualify for a USDA loan if their income is below 80% of the median income in their area. For larger households, the limit is higher, up to 115% of the median income. There are no income limits for FHA loans.

Eligibility: To qualify for a USDA loan, potential borrowers must meet certain eligibility criteria related to their employment, income, debts, and property location. There are no such eligibility requirements for FHA loans.


In conclusion, the USDA loan is a great option for those who are looking to buy a home with low to moderate income. The income limits for the loan are based on the size of the household and the median income in the area. The USDA does not require a down payment, and the interest rates are typically lower than those for conventional loans.

Read more about USDA loans with our questions and answers page

SOURCE: Single Family Housing Income Eligibility

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