USDA Rural Development home loans are one of the most misunderstood and overlooked home loans. Many wrongly believe the USDA income limits are really low, which is way wrong. Plus, it isn’t just for really rural or small homes. Actually, most properties in America are eligible and loans can even exceed $400,000. Therefore, USDA loans offer many low to middle income families one of the best purchase options available. By offering a no money down mortgage with unbelievably affordable terms, USDA should always be considered. USDA does have property eligibility requirements as well as maximum household income limits.
Here’s a key point to remember. Although there are USDA income eligibility requirements, the household income maximums are very liberal. Therefore, many families fall within the USDA loan income limits. The bonus is buying a home with 100% financing, a 30 year fixed interest rate, and low mortgage insurance. So, let’s dig into the details and why you should consider USDA!
Increased USDA Income Limits 2019 – 2020
The path to homeownership just became easier. Lately, USDA Guaranteed loans have continued to make it easier to buy a home. In 2016, USDA drastically lowered the funding fee and annual fee for borrowers. These reduced costs basically made USDA monthly payments lower. Now for 2019 & 2020, USDA loan income limits have increased across the country.
The standard income limits for most counties range from $86,850 to $114,650, depending on household sizes. USDA divides household sizes as 1 – 4 members and 5 or more. So with a family size of 1 – 4, the household income limit would be $86,850. Additionally, if the family size is 5+, then the income limit would be $114,650. BUT, there are some counties with much higher USDA income limits. For instance, the Raleigh NC MSA allows for households to make up to $140,700! As a national lender, we are able to offer USDA loans in most states (not AK, HI, TX, NY).
“There are some counties with much higher USDA income limits!”
USDA Income Eligibility Rocks!
Do keep in mind to contact us for actual income limits for your area. Especially if the home is in an MSA area. We are happy to figure your qualification. Additionally, if a household makes more than the standard USDA limits, there are ways to exceed them! So, don’t miss out on ways to use USDA no money down financing. Exceeding the income limits may be possible.
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How to Exceed USDA Loan Income Limits
Yes, USDA has household income limits. BUT, families may often exceed these USDA income limits! First of all, keep in mind that USDA goes by ALL household income. So it is not just the actual borrowers. For instance, if a parent receiving social security income or retirement income is going to live in the house but not be on the loan, the income must still be included in the household income limit. In addition to liberal income limits, there are several tricks to exceed these limits. Often these limits may be exceeded by right much!
Tricks to Exceed USDA Income Threshold!
- Children under 18
- Childcare expenses
- 18 year old full time student
- Disability expenses
- Medical expenses not covered by insurance
Children Help Income Eligibility
The most common way to exceed the household income limit is by adjusting the income by $480 per child under 18. So if there are two children in the household, this adjusts the income limit up by $960.
Childcare Expenses Increase USDA Income Eligibility
Next, documented daycare expenses may be used to increase the income limit. Therefore, if the borrowers paid $6000 in daycare expense, this goes straight to staying under the limits.
Other Ways to Exceed USDA Limits
Occasionally there may be an 18 year old that is still a verified full time student and this may also use the $480 adjustment. Finally disability or medical expenses may be used to exceed the limits. There are special requirements to use these exceptions. To read more on these exceptions, check out our article, “How to Exceed the USDA Household Income Limits“.
Mortgage Rules Have Changed So Why Are You Still Renting?
The important thing to remember is that this article is to show you solutions to buying a home. There are some creative ways to help buyers use USDA to purchase a home. But, make sure not to qualify or disqualify yourself! Call our team of USDA experts to see if this is an option for you. We have an efficient USDA process to help buy quickly with one of the best mortgage options available. If USDA is not an option, there are lots of other ways to become a homeowner.
Check Out our USDA Blog Articles or USDA Main Page
Team Move Difference
We believe that matching the right mortgage loan solution with a client’s goals and specific scenario is key. The result is a successful mortgage loan closing. First of all, it starts with the initial conversation. So, the client and I have a thorough discussion up-front to ensure the best chances of success.
Throughout the home loan process, the communication and execution continue through closing and beyond. In addition, being available and providing education to my clients is a priority for me. Because informed clients make better decisions and close their loans on time. Most of all, they feel good about those decisions. At the end of the day, our success is measured not in the loans that we close. But, in the satisfaction of knowing our clients have achieved their personal home ownership and/or financial goals in the process.