USDA income limits 2020 increase allows more home buyers purchase a home with no down payment. Effective May 2020 through April 30, 2021, USDA guaranteed housing base income limits are as follows: $90,300 for 1 – 4 person households and a whopping $119,200 for 5 or more person households. Guys, that is not low income! So, we are talking about a majority of American households meeting this income limit. Therefore, first time buyers or repeat buyers have the ability to use an amazing product to purchase a home without down payment.
USDA – Making Enough Income But Not Too Much
Most of the time buyers want to make enough money to qualify for a home loan. But, this is a time where it helps to under a certain amount. Like other loans, there is a debt to income ratio limit. Thus, making enough money in relation to covering the debts and the housing payment is key. Although when it comes to USDA Rural Development home loans, the total “household” income is capped. Notice the word household. So, it is not just the borrowers on the loan. This means income must be counted for everyone, on the loan or not, that is 18 years old or more.
USDA Income Limits 2020
As mentioned above $90,300 is the 2020 USDA income limit for households with up to 4 people. Certainly, most middle income families could fall into this category. Then, families with 5 or more people can make up to $119,200 per year in income! But, there are some higher cost counties which have even higher income limits. These are typically larger cities like Raleigh NC ($108,250 1 -4, $142,900 5+), Charlotte ($96,050 / $126,800), Charleston SC ($93,150 / $122,950), and more.
By clicking on the USDA income limits map, anyone can check the threshold for their county.
Exceeding USDA Income Limits
Do you make a little too much income? There could be a solution! Because USDA has allowed exceptions which could allow using this no money down program while making over these income limits. First of all, families get an extra $480 per child under 18 in the household. Next, the income limits may be exceeded by the amount of documented childcare expenses. That can help a lot because it could even be $12,000 per year easy in some areas. Finally, proving medical or disability expenses is another way. For a more thorough review of these exceptions, check out “How to exceed the USDA household income limits“.
Why Consider a USDA Loan?
- No down payment
- Low fixed interest rates
- Lowest funding fee expense of government loans
- Low monthly PMI – USDA calls it an annual fee
- Exceptions to own 2 houses
- Streamline refinance program for existing USDA loans
- No loan limits
- Seller may pay buyer closing costs up to 6% of the sales price