Backed by the U.S Department of agriculture, the USDA home loan is a great way for people in the low to moderate income group to buy a home in a rural area. The most attractive thing about this loan is that it allows people qualified for the loan to buy a home at 0% down payment. What makes a person eligible for the loan? A person is eligible for the USDA loan if they meet the conditions listed below:
- S citizen or permanent resident
- The monthly mortgage payment is less than 30% of what you earn each month. The monthly payment includes the principal, interest, insurance, and taxes.
- Dependable income for at least a year
- A decent credit history i.e. meets a minimum requirement of a 640-credit score
You’re probably wondering what a dependable income for a year means. If that is the case, then read on to find out the income requirements for the USDA loan.
The USDA Loan Income Limits
The purpose of the USDA loan is to make it possible for people in the low-to-moderate income groups to buy a home. The basic income requirement for the loan is that the household income of the applicant should not be more than an area’s income limit. You most likely meet the USDA loan’s income eligibility requirements if your income is equal to or less than the income limit for your area.
While the income limits for the USDA loan may vary with the region, the base-income limit is the same throughout the country. The base income limits for the USDA loan are:
- $82,700 for a household of 1 to 4 members
- $109,150 for a household of 5 to 8 members
As seen above, the income limits for households with 1 to 4 members is different from income limits for households with 5 to 8 members. In addition to this, the income limit will be higher for households in high-cost counties than households in counties with a reasonable cost of living.
Whether you fall into a low-income or moderate-income family category, the USDA will look for a minimum of two-year employment history with consistent income. However, relaxation can be given on the two-year requirement if the applicant is a student. No collateral is required to secure the USDA Loan. However, the assets used as security for the loan can help to overcome any credit imperfections of a USDA loan applicant.
The home purchased with the USDA loan needs to be in an area or location designated for the purpose by the USDA. The USDA designated areas or locations are present throughout the country. If you fulfill all the above requirements including the income limits for your area, then you will be in a good position to apply for and secure a USDA home loan.
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