USDA home loans are an excellent choice for buyers looking to purchase a home in rural or suburban areas. However, one important factor that determines your eligibility is your income level. Let’s break down what USDA loan income limits are, why they matter, and how they work.
What Are USDA Loan Income Limits?
USDA loans are backed by the U.S. Department of Agriculture and are meant to support moderate- to low-income buyers. To qualify, your household income must not exceed a certain percentage of the median income in your area.
These limits ensure that the program benefits those it was designed to help – families who might not otherwise be able to afford a home loan.
How USDA Sets Income Limits
The USDA sets income limits based on:
- Household size (more people, higher limit)
- County or state median income
- Combined income of all household members over age 18
In most areas, the limit is 115% of the median household income for that region.
Example of Income Limits
Let’s say the median income in your area is $60,000. The USDA loan income limit might be set at $69,000 (115%). If your household income exceeds this, you may not be eligible.
Note: The limits also account for certain deductions, such as child care or medical expenses, which can help you qualify even if you’re slightly over the threshold.
Household Income vs Qualifying Income
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Household Income: Total income from all members over 18, including part-time and non-borrowers.
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Qualifying Income: Income used to calculate your ability to repay the loan.
Even if your qualifying income meets the loan criteria, your household income must also fall within the USDA’s limit.
2024 General USDA Income Limit Estimates
| Household Size | Income Limit (Average) |
|---|---|
| 1-4 People | ~$103,500 |
| 5-8 People | ~$136,600 |
These vary by location – urban vs rural areas may have different limits.
How to Check Your Eligibility
- Visit the USDA’s income eligibility tool online.
- Select your state and county.
- Enter your household details and income sources.
- The tool will tell you if you meet the limit.
Tips to Stay Within USDA Limits
- Include only necessary income when calculating household income.
- Deduct allowable expenses like childcare or elderly care.
- Speak with a USDA lender to verify your status.
Why Income Limits Matter
Failing to meet the income criteria disqualifies you from USDA loan benefits, such as:
- No down payment
- Lower interest rates
- Reduced mortgage insurance costs
Meeting the limit means access to one of the most affordable home loan options available.
Conclusion
USDA loan income limits are a key requirement that every applicant must meet. By understanding how these limits are calculated and what counts as income, you can better position yourself to qualify for a zero-down mortgage with competitive rates. If you’re unsure, a USDA-approved lender can guide you through the process.