USDA Income Limits in 2024

USDA loans are designed to help low- and moderate-income homebuyers obtain affordable mortgages in eligible rural and suburban areas.

To ensure borrowers fall within the Rural Development program's scope, all applicants must meet household USDA income limits. These limits vary by county or metro region and are adjusted annually to keep up with inflation.

In most areas of the country, the USDA loan income limits for 2024 are $112,450 for up to a four-person household. Households with five to eight people have a standard limit of $148,450.

Key Takeaways

• USDA loans have household income limits to ensure applicants meet the agency’s mission of serving low- and moderate-earning borrowers.

• For 2024, the standard USDA income limits are $112,450 for households of up to four people and $148,450 for households of up to eight.

• Rural and suburban communities with a higher cost of living may have higher income limits.

• Certain expenses, such as child care, disability, and medical costs, may be deducted from your annual income calculation.

Why USDA Income Limits Exist and How They Work

Agency guidelines set maximum USDA income limits to ensure that only low-to-moderate-income buyers can qualify for Rural Development mortgages. These income limit requirements set USDA loans apart from most other types of mortgages, which generally have no maximum income cap, separate from a few targeted conventional programs.

For fiscal year 2024, the standard USDA income limit for a household with up to four members is $112,450. Households with five to eight members have a standard limit of $148,450. Households with more than eight people have an increased limit, an additional 8% of the area's four-person limit per additional member.

While these standard limits apply to most parts of the country, eligible locations with higher costs of living may have expanded USDA income maximums.

What Affects USDA Income Limits?

USDA income limits are not the same for every applicant. Borrowers will likely face different limits based on their location and household size.

USDA Income Limits by County

The agency establishes USDA income limits by county or metropolitan statistical area (MSA). While most locales in the United States follow the standard income limits, communities with higher income levels may have comparatively higher limits to account for the elevated cost of living.

USDA Income Limits by Household Size

The USDA also sets different income limits based on household size. Requirements are separated into one-to-four-member and five-to-eight-member households.

Here’s a quick chart showing some USDA-eligible counties with expanded income limits and a larger household size affects them:

Keep In Mind: USDA income limits may also be affected by the time of year you apply. Maximum income levels are typically adjusted in late spring, typically May or June. If you're applying around then, you may be able to qualify under higher limits once they're updated.

How USDA Loan Income Limits Are Calculated

The USDA loan income limits are set for each county or MSA based on the greater of:

• 115% of the US median family income

• 115% of the average of the state-wide and non-metro median family incomes

• 115/80ths of the area’s low-income limit

Limits for households with five to eight members are higher, generally around 150% of the income level used for calculations. Households with more than eight members can add 8% of their area's four-person limit per additional member.

For Example: Applicants with a 10-person household in a standard-cost area would have a maximum USDA income limit of $162,442. This is calculated by taking the base 8-person limit of $148,450 and adding 8% of the 4-person limit of $112,450 (or $8,996) per additional person.

$148,450 + $8,996 + $8,996 = $162,442 10-person household income limit

Three Types of USDA Income Calculations

USDA lenders calculate three different types of income to process your loan application:

• Annual income

• Adjusted annual income

• Repayment income

Annual Income

The USDA annual income calculation is based on the gross earnings of most household members age 18 or older who are not full-time students.

This can include earnings from:

• Wages and salaries

• Overtime

• Commission

• Fees

• Tips

• Bonuses

• Housing allowances

• Other sources of compensation

Full-time students are only accountable for their first $480 in earnings for annual income calculations.

Household members currently unemployed but seeking new employment must include their previous earnings in the calculations. Individuals who are not working and do not plan to seek reemployment may be able to be excluded from USDA annual income figures.

Adjusted Annual Income

Your adjusted annual income is your household's total annual income minus any allowable deductions. This income calculation determines whether you meet USDA loan income limits and are eligible for a loan through the Rural Development program.

Some of the items that can be deducted for your adjusted annual income include:

• Child care expenses

• Disability expenses

• Medical expenses

You can also qualify for deductions for dependents living with you and for households with elderly members.

Repayment Income

Commonly referred to as qualifying income, your USDA repayment income includes the earnings of just the loan applicants. This is the income calculation used to determine how large of a loan you can qualify for.

Unlike other USDA income calculations, only borrowers included on the mortgage are assessed for repayment income.

Tips for Qualifying Under USDA Income Limits

Are you worried you may not meet the USDA loan income limits for your area and household size? Here are some tips to help you better understand the process and maximize your chances of coming in under USDA income requirements:

1. Understand Annual Income Reporting Requirements – Annual income calculations include the earnings of nearly all adults in the household, not just the ones on the loan. Exceptions exist for full-time students (limited to a maximum of $480 in calculable income) and currently unemployed individuals who do not plan to seek reemployment.

2. Remember, the USDA Uses Your Adjusted Annual Income – Although your lender will calculate your household's annual income, it's the adjusted annual income that's used for eligibility purposes. This figure accounts for elderly and dependent deductions and other costs, such as child care, disability, and medical expenses.

3. Apply Prior to Any Possible Promotion or Wage Increase – If you're approaching the USDA household income limits and may be getting a promotion or raise in the near future, you might want to apply sooner rather than later so you can qualify at your existing income level. However, the lender will ask if you expect any income growth in the next 12 months.

4. Wait for Annual USDA Income Limit Increases – The USDA increases its income limits annually based on data from the US Department of Housing and Urban Development (HUD). This increase typically occurs in late May or June. Waiting until the next adjustment may help you qualify if you're slightly over the current limit.

5. Consider Neighboring Communities – USDA loan limits are set by county or metropolitan statistical area. In some cases, properties that are minutes apart but located within separate geographic regions can have drastically different income limits.

6. Look Into Alternative Mortgage Options – Most other types of loans do not have the same income limit requirements as USDA-backed mortgages. If you cannot qualify with a USDA lender, you may want to look into a conventional loan or a mortgage insured by the Federal Housing Administration or Department of Veterans Affairs.

USDA Income Limits vs Loan Limits

While USDA-backed mortgages have income limits, the Rural Development program has no maximum loan limits. Unlike conventional and FHA loans, which have set caps, the amount you can borrow through USDA lenders is limited only by your repayment ability.

Here are the maximum standard single-family loan amounts in 2024 for the most common types of residential mortgages:

Remember that while USDA mortgages do not have fixed loan limits, your applicable income limits constrict the upper range of what you can borrow.

For example, borrowers with a household of four members in Belknap County, NH would have a USDA income limit of $131,100, or about $11,000 per month. USDA loans let you use up to 34% of your income on the house payment, including taxes, insurance, and HOA dues, or $3,700 per month in this example. Assuming $600 per month for taxes and insurance, that leaves $3,100 for the principal and interest. At 7.1% APR, that’s about a $375,000 home price. (Rates and payments are for example purposes only and may not be available.)

Other Requirements for USDA Loans

USDA income limits are only one aspect of qualifying for an agency-backed mortgage. Some of the other program requirements include:

• Credit Score – The USDA does not set a required credit score, but many lenders establish their own minimum of 640. Borrowers with lower scores may still qualify by shopping for a lender willing to underwrite their loan manually.

• Debt-to-Income Ratio – Your new mortgage and associated housing expenses can account for up to 34% of your monthly qualifying income. Your total debt obligations, including your housing costs, can be as high as 41%.

• Property Type – Only single-family homes occupied as your primary residence are eligible for USDA loans. You must usually occupy the property within 60 days of closing. However, exceptions can be made for USDA home improvement mortgages and construction loans.

• Geographic Restrictions – Agency-backed mortgages are only available for properties located within USDA-designated areas, including rural and suburban communities with up to 35,000 residents.

• Minimum Property Requirements – All homes must meet the USDA minimum property requirements regarding the safety, security, and suitability of residential dwellings and homesites.

• Mortgage Types – All USDA-guaranteed mortgages are 30-year fixed-rate loans. USDA lenders cannot issue adjustable-rate mortgages or mortgages with shorter terms.

• USDA Guarantee Fee – All USDA loans come with a 1% upfront guarantee and a 0.35% annual fee, which help ensure the sustainability of the Rural Development loan program.

Do You Meet USDA Income Limits for 2024?

The USDA home loan program can be a powerful tool that allows qualified rural buyers to purchase property with no money down and with more straightforward eligibility requirements than other mortgage alternatives.

However, staying under USDA income limits – $112,450 for households of up to four in most areas in 2024 – can be difficult, considering that all adults in the home’s earnings may be included in calculations, even if they aren't on the mortgage.

For an individualized assessment of whether you qualify under current USDA loan income limits – as well as other types of mortgages without income limits – take a look at today's interest rates and apply with an experienced USDA lender in your area.