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USDA Loan Income Requirements

USDA Guaranteed Loan Income and Employment Requirements
DTI ratios, income limits, job history, and other income requirements.

2020 USDA Loan Income Requirements

In order to be eligible for a USDA loan, your income must meet certain requirements.  This includes having a household income that does not exceed the USDA income limits for your area, as well as meeting certain debt-to-income ratios.

Overall, USDA loans have less strict guidelines related to job history compared to other mortgage programs.  However, your employment will also be reviewed to ensure your ability to repay the mortgage.

USDA Loan Income Limits 

The USDA has strict income limits in place that determine who is eligible for a USDA loan. These limits are set at the county level. For most of the country, these limits are $86,850 for a 1-4 member household, and $114,650 for a 5-8 member household.  These limits are based on the total income of everyone who lives in your home (not just relatives, but the entire household).  In many counties, higher income limits are allowed.  You can lookup the 2020 USDA income limits for your county using this tool.

USDA Loan Income Eligibility 

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There are several income limit adjustments which you may qualify for.  You can reduce the amount of income that is counted by $480 for each member of your household under the age of 18, any disabled individual, and any full-time student over the age of 18.  To see what income adjustments you may be eligible for, use this USDA income eligibility tool.

Would you like to see if you qualify for a USDA loan?  We can help match you with a mortgage lender that offers USDA loans in your location.  To have a USDA lender contact you, request to get matched with a lender.

USDA Loan Debt-to-Income Ratios

The standard DTI ratios for USDA loans are 29/41.  The front end number represents the maximum amount your new mortgage payment (PITI – principle, interest, taxes, and insurance) can be compared to your monthly income.  The backend ratio is your mortgage payment, as well as other monthly payments on debts that are reported on your credit report (such as auto loans, credit cards, and other types of reported debts).

If your DTI is higher than the permitted 29/41, you might still qualify if you have adequate “compensating factors”.  These so called compensating factors for USDA loans can include having a higher credit score (specifically higher than a 660), having money in savings, and other …. that can compensate for higher DTI ratios.  If you have a 680 or higher score, there should not be any complications in getting an exception for higher ratios (such as up to 45% on the backend).

Employment Requirements and Job History

Unlike other types of mortgages, the USDA does not require seasoned employment history. Most home loans, such as FHA and conventional, require 2 years on the job.  This leniency with USDA loans is a huge benefit for newly employed prospective homebuyers.

Keep in mind, that in spite of the lax guidelines related to job history, you still need to prove you have stable, reliable income.  A nice aspect of USDA loans is that the underwriting procedures takes a “common sense” approach and really looks at the entire situation, versus just strict requirements that could immediately disqualify an applicant.  As long as you are able to show consistent employment with sufficient income (but not over the income limits), you should meet the employment requirements for USDA loans.

Would you like to see if you qualify for a USDA loan?  We can help match you with a mortgage lender that offers USDA loans in your location.  To have a USDA lender contact you, request to get matched with a lender.

Frequently Asked Questions:

Can I qualify with a second job, second income, or a part-time job?
Income from a second job can be counted, but it is handled a bit differently from the primary USDA job requirements. In order for second income to count, you must be able to provide two years of tax returns and also show that you will likely continue to receive the income for at least 3 more years.

Are USDA loans available for self-employed borrowers?
If you are self-employed, you may be eligible for a USDA loan. You must be able to provide 2 years of federal tax returns and meet the other guidelines of income limits and debt-to-income.

Whose income is counted towards the income limits?
Any family member or non-family member over the age of 18. Only the income of adults is counted, income received by minors is never counted towards the income limits or debt-to-income ratios.

Aside from employment income, is any other types of income counted?
Only verifiable income from steady employment received by adults living in the household is counted.  If you or members in your household have recently received money in the form of any of the following examples of miscellaneous types of income, it is not counted:  lump sums, gifts, withdrawal of cash assets, reimbursement of medical expenses, income received for foster care, and food stamps.  These are just a few examples of income that is not counted.

Have more questions about USDA loans?   We can help match you with a mortgage lender that offers USDA loans in your location.  To have a USDA lender contact you, request to get matched with a lender.

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