All About USDA eligibility and income limits: 2021 USDA mortgage

All About USDA eligibility and income limits: 2021 USDA mortgage

USDA eligibility is based on a combination of household size and geography, in addition to the typical mortgage approval standards such as income and credit score verification.

Households of 1-4 people can have an income up to $91,900 in most of the U.S., and households with 5 or more members can make up to $121,300. USDA income limits are even more generous in some areas with a higher cost of living.

If you’re buying a home outside of a major city, and have decent credit, it’s worth checking your eligibility for this zero-down loan program.

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The USDA home loan program

The USDA loan program is one of the best mortgage loans available for qualifying borrowers.

There’s no down payment required, and mortgage insurance fees are typically lower than for conventional or FHA loans. USDA interest rates tend to be below-market, too.

To qualify for 100% financing, home buyers and refinancing homeowners must meet standards set by the U.S. Department of Agriculture, which insures these loans.

Luckily, USDA guidelines are more lenient than many other loan types.

USDA eligibility requirements

Basic USDA loan requirements include:

  • Minimum credit score — 640 with most lenders
  • Clean credit history — No late payments or recent bankruptcy or foreclosure
  • Income requirements — Income limits vary by area; often $91,900 for a 1-4 person household
  • Employment — Borrowers need a steady income and employment history. Self-employment is eligible
  • Geographic requirements — You must own a home in an eligible area
  • Property requirements — Must be a single-family home you’ll use as your primary residence
  • Loan type — Only a 30-year, fixed-rate mortgage is allowed

In addition, most USDA lenders want borrowers to have a debt-to-income ratio (DTI) below 41 percent.

That means your monthly debt payments (including things like credit cards, auto loans, and your future mortgage payment) shouldn’t take helpful link up more than 41% of your gross monthly income. Read more