USDA Loans: Eligibility and Income Limits 2022

To get approved for a USDA loan, there are eligibility requirements a borrower must meet. In addition to the typical mortgage approval requirements such as income and credit score verification, eligibility is also based on a combination of household size and geographic location. 

USDA loan income limits are set at 115% of your area median income. Meaning your household income can’t be more than 115% above the median income where you live. With that said, the more dependents you have, the more your income can be. 

A household of 1-4 members is required to have an annual household income that does not exceed $103,500 in most areas, while a 5-8 member household must not exceed $136,600. 

Regardless of whether you plan to use a USDA loan to buy or refinance a home, this program tends to be an accessible and affordable option. 

It’s a zero-down loan, meaning there’s no down payment required. However, there are mortgage insurance fees for the life of the loan but they are very affordable at .35% a year, based on the remaining principal balance and a 1% upfront fee, based on the loan size. Through these mortgage insurance premiums, the government is able to keep the USDA rural development program so affordable. 

In order to qualify for 100% financing, the borrower must meet standards set by the U.S. Department of Agriculture. Those basic requirements include:

  • Minimum credit score of 640 with most lenders
  • Clean history with no late payments or recent bankruptcies or foreclosures
  • Household income limit that falls within the requirement set by the area the property is in
  • A steady income and employment history 
  • The property must be based in an eligible rural area
  • The home must be a single family home that is used as a primary residence
  • Only a 30-year fixed rate mortgage is allowed 

In most cases, the USDA lender will also want the borrower to have a debt-to-income ratio that is below 41%. It is an excellent program for those that don’t have a lot of assets. 

The goal of USDA loans is to help moderate to low-income buyers achieve homeownership. So if you meet the basic criteria mentioned above, we advise checking your eligibility with our team of professional and reliable loan officers today!