What Are the Income Limits for USDA Loans?

USDA loans, also known as Rural Development loans, are government-backed mortgages designed to help low- and moderate-income families purchase homes in rural areas. These loans offer several benefits, including low interest rates, no down payment requirements, and flexible credit guidelines. However, to qualify for a USDA loan, borrowers must meet certain income limits.

The income limits for USDA loans vary based on location and household size. In general, the higher the median income in an area, the higher the income limit for USDA loans. Additionally, larger households are typically eligible for higher income limits.

Income Limits Overview

• USDA loan income limits are set by the U.S. Department of Agriculture (USDA) and vary by location and household size.
• The income limits are based on the median household income for the area where the property is located.
• Borrowers must meet the income limits to qualify for a USDA loan.

Determining Eligibility

When determining income eligibility for USDA loans, the USDA considers several factors, including:

• Gross income: This includes all income from all sources, such as wages, salaries, tips, bonuses, commissions, self-employment income, and investment income.
• Household size: The number of people living in the household, including the borrower, co-borrower, and any dependents.
• Location: The median household income for the area where the property is located.

The USDA excludes certain types of income from the calculation, such as:

• Social Security benefits
• Supplemental Security Income (SSI)
• Temporary Assistance for Needy Families (TANF)
• Child support payments
• Alimony payments

Income Calculation

To calculate income for USDA loan eligibility, the USDA uses the following formula:

Adjusted Gross Income = Gross Income - Excluded Income

The USDA then compares the adjusted gross income to the income limits for the area where the property is located. If the adjusted gross income is below the income limit, the borrower is eligible for a USDA loan.

Special Considerations

There are a few special considerations or exceptions to the income limits for USDA loans:

• Veterans: Veterans and their spouses may be eligible for higher income limits.
• Active military personnel: Active military personnel may be eligible for higher income limits.
• Manufactured homes: The income limits for manufactured homes are typically higher than the income limits for site-built homes.

Resources For Determining Income Limits

Borrowers can find information about income limits in their area by visiting the following resources:

• USDA Rural Development website
• USDA Income Eligibility Calculator

Income limits are an important factor in qualifying for USDA loans. Borrowers must meet the income limits for the area where the property is located and their household size. There are a few special considerations or exceptions to the income limits, such as for veterans, active military personnel, and manufactured homes. Borrowers can find information about income limits in their area by visiting the USDA Rural Development website or using the USDA Income Eligibility Calculator.