USDA Loan Income Limit Eligibility
The USDA loan program is intended to help homebuyers purchase real estate in rural areas. We’re talking about mortgages with no money down, lower mortgage insurance fees than with FHA financing, attractive credit requirements, and fixed rates that will not change during the life of the loan.
But – of course – no one is just giving out such loans. You have to qualify, and that brings us to a program oddity: USDA income limits because the program is only open to low- and moderate-income buyers.
The 2025 USDA loan income limit for 1-4 member households as this is written is $112,450 or $148,450 for 5-8 member households in most U.S. counties. Total household income should not exceed these limits to be eligible for a USDA home loan, but income limits can vary by location to account for the cost of living.
“USDA's purpose is to assist very-low, low, and moderate-income households,” said Dan Bartelt Underwriter & Expert Reviewer at Neighbors Bank. As a result, USDA loans take into account the 'annual income' for all adult household members. The limits are set annually based on the area where you are purchasing, and the household size. In order to qualify for USDA financing, the annual income for all adult household members must be analyzed to support that it is under the current income limit. An applicant will be ineligible for USDA financing if the annual household income were to exceed the current income limit.”
For the income limits where you want to live, press here.
Households with 1–4 members have different income limits when compared with households that include 5–8 people. Similarly, applicants living in high-cost counties have higher income limits than those living in counties with lower costs,
For example, in Honolulu the income limit for a household with one to four members is $160,050 and $211,300 for a household with five to eight people. These figures are a lot more than the $112,450/$148,450 limits found in most areas.
And what if a household has more than eight members? The government has this figured out. If a household exceeds eight members, the applicant receives 8% of the 4-person limit for each additional member.
The USDA uses annual household income for the limit measurement and considers expected income for the coming year. Household earnings include income received by all adult members of the household, regardless if the household member is on the loan or not.
For example, if the applicant, the applicant’s spouse, and the applicant’s adult brother share a home, annual wages from all three are included in the calculation.
The USDA requires lenders to project household income for the coming 12 months using historical data, such as W2s and current pay stubs.
The USDA income limit is determined by gross income, the amount before any payroll deductions. This income includes salary, overtime, commission, tips, bonuses, and any compensation for services. Income may also include housing allowances and cost of living allowances.
"A common misconception about USDA income limits is how they’re calculated,” said Dan Bartelt, Underwriter & Expert Reviewer at Neighbors Bank. Lenders sometimes take a ‘best-case’ approach, but the proper method is to analyze expected income for the next 12 months beyond the closing date. Often, we can identify one-time payments or limited receipt incomes that shouldn't count toward eligibility—sometimes making the difference in qualifying for the USDA program."
If a member of the household is a small business owner or farmer, the net income from operations is applied.
Mortgage lenders can have additional guidelines regarding income and employment to qualify applicants.
The USDA provides certain income exceptions when computing income limits.
A few of the more common income categories that do not count towards the USDA’s income limits include:
There are other situations where income does not count toward your USDA loan’s income limit. Lenders will also look at different factors to determine your repayment income, a comparison of monthly income and monthly debts known as the “debt-to-income” ratio (DTI).
It might seem that since the USDA program is meant for low- to moderate-income borrowers, there is a limit on what homes they can buy. Instead, unlike other loans such as FHA financing, the USDA does not set loan limits, it instead bases maximum loan amounts on the borrower's ability to qualify.
Since there is no maximum loan limit with the USDA Guaranteed Loan, your preapproved loan amount will be determined by several factors, including:
For specific information, speak with a home loan specialist to determine if you meet the USDA’s income requirements.
