USDA Loan Income Limits

Chanilia Nixon

The USDA designed the USDA home loan to assist those in rural and semi-rural with a moderate or low income to purchase a home. To ensure their mission is met, the USDA sets income limits on the program.

USDA income limits vary by location, but the program is generally available to homebuyers whose household makes no more than 115% of the median income for the area where the property is located.

How Are USDA Income Limits Determined?

The official median income for all parts of the United States is tallied by the United States Census Bureau and is also reported by the USDA.

Finding the median income is relatively easy; however, knowing how to count qualifying income can be difficult. Sometimes borrowers, and even inexperienced USDA lenders, miscalculate income and deem themselves ineligible for a USDA loan, when in fact they may be eligible.

Additionally, there are adjustments for the number of those living in the property. USDA income limits are different for a home with 1-4 occupants then a home with 5+ residents.

What Income Qualifies Toward a USDA Loan?

All who will be living in the property must count their income against the 115% guideline. Even those who aren’t officially on the loan application. Examples of income that counts towards the 115% total includes, but is not limited to:

  • Gross salary, base wages, overtime pay, commissions, fees, tips, bonuses and housing allowances
  • Net income from a farm, business or professional service
  • Interest, dividends and income from real or personal property
  • Social security, annuities, insurance policies, retirement funds, pensions, disability and death benefits
  • Allowances, such as alimony, child support and recurring monetary gifts
  • All regular, special pay and allowances of a member of the armed forces
  • Income from an applicant’s spouse

The 115% qualifier is an easy way to make a quick determination, but it’s important to understand there are many intricacies involved in counting income.

When determining income, it is best to speak with a USDA loan specialist. USDA loan specialists know how to properly count your income and determine if you do make the grade. You’ll be asked to provide your most recent pay check stubs, W2s and your income tax returns if you’re self-employed or receive income from sources other than your job.