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2018 USDA Loan Income Limits & USDA Eligibility Check

January 2nd, 2018     |     

USDA Loans: Low Rates With No Downpayment

USDA loans are mortgage loans which are guaranteed by the U.S. Department of Agriculture. The program is officially known as the USDA Rural Development Guaranteed Housing Loan Program, or the "Section 502 loan", named for its place in the USDA charter.

USDA loans are also known as "Rural Housing Loans", which can be a bit of a misnomer. USDA loans can be used be used in rural areas, but many suburban areas remain eligible as well for the program as well.

USDA loans are popular among today's home buyers because the USDA program offers no-money-down financing.

Home buyers can finance 100% of a home's purchase price; and, can even use the loan to help purchase a manufactured home or a modular home.

Furthermore, because USDA loans are guaranteed against loss by the U.S. Department of Agriculture, they are of very little risk to banks which make them.

Low risk brings low rates and this is why USDA mortgage rates today are often the lowest of all of the government-backed mortgages.

USDA mortgage rates are typically lower than the rates for FHA loans, VA loans, and conventional mortgages via Fannie Mae and Freddie Mac.

Lastly, the USDA loan program offers reduced mortgage insurance premiums (MIP) to its borrowers.

The annual USDA mortgage insurance premium -- at just 0.35% of the loan amount -- is 40% lower than the MIP charged for a comparable FHA-backed loan.

USDA loans can be big money-savers; and they're available to first-time home buyers as well as repeat home buyers. Homeownership counseling is not required to use the USDA home loan program.

Most closings can happen in 45 days or fewer.

Check My USDA Eligibility

What Is USDA Eligibility?

USDA eligibility is based on a combination of household size and geography, in additional to the typical mortgage approval standards such as income and credit score verification. USDA eligibility for a 1-4 member household requires annual household income to not exceed $78,200 in most areas of the country, but up to $202,250 for certain high-cost areas; and annual household income for a 5-8 member household to not exceed $103,200 for most areas, but up to $266,950 in expensive locales.

This USDA loan information is accurate as of today.

Check My USDA Eligibility

USDA Mortgage Insurance Requirements

The USDA mortgage is backed by the U.S. Department of Agriculture, and partially funded by the borrowers which use the program. Via mortgage insurance premiums charged to program homeowners, the government is able to keep the Rural Housing Loan program affordable.

The USDA last changed its mortgage insurance rates in October 2016. Those rates remain in effect today.

Check My USDA Mortgage Insurance Rate

Today's USDA mortgage insurance rates are :

  • 1.00% upfront fee paid at closing, based on the loan size
  • 0.35% annual fee, based on the remaining principal balance

As a real-life example of how USDA mortgage insurance works, let's say that a home buyer in Cary, North Carolina is borrowing $200,000 to buy a home with no money down.

The buyer's mortgage insurance costs will include a $2,000 upfront mortgage insurance premium, which is added to the loan size of $200,000; plus a monthly $58.33 payment for mortgage insurance.

Note that the USDA upfront mortgage insurance is not required to be paid as cash. It can be added to your loan balance for you to reduce your funds required at closing.

USDA Loan Income Limits

Via its Rural Housing Loan, the USDA offers 100% financing at very low mortgage rates in rural and suburban neighborhoods.

Even better is that underwriting approvals are "relaxed". Borrowers don't need to meet every requirement to the last letter in order to get approved.

However, there is one area in which the USDA is unyielding.

The USDA will not guarantee a mortgage for a household which exceeds its maximum income limits for a given area. This is because the USDA is meant to promote homeownership among households of "modest means" only.

To be eligible for the USDA financing, then, the agency states that a household's annual earnings must not exceed the median household income for the area by more than 15 percent, with an allowance for the size of your household.

For example, the USDA income limit for an 8-member household is higher than the USDA income limit for a 4-member household; just as the income limit for a 10-member household will be higher than the income limit for an 8-member household; and, so on.

USDA income limits have a floor, based on household size:

  • 1-4 member household : $78,200
  • 5-8 member household : $103,200

Note that USDA income limits vary by area, though. In San Francisco, California, where the cost of living is among the highest in the nation, the 2018 USDA income limits for a 1-4 member household is $145,700, and $192,300 for a household of eight.

USDA income limits in Raleigh, North Carolina start at $91,850.

Households of more than 8 members can add eight percent for each additional member to their 1-4 member household USDA income limit.

Lookup your local USDA Income Limits here.

What Are Today's USDA Mortgage Rates?

For home buyers in search of a low- or no-money-down mortgage, the USDA home loan offers low rates, flexible guidelines, and inexpensive mortgage insurance.

Take a look at today's real mortgage rates now. Your social security number is not required to get started, and all quotes come with instant access to your live credit scores.

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The Mortgage Reports

FHA Loan

A loan backed by the Federal Housing Administration and offered by lenders. It requires just 3.5% down and lower credit scores are okay.


Mortgage Default

Default is the failure to pay interest or principal on a loan or security when due. Default occurs when a debtor is unable to meet the legal obligation of debt repayment.



FHA MIP is short for mortgage insurance premium and is FHA's "brand" of mortgage insurance. Homeowners pay an upfront and monthly fee for FHA loans.


Basis Points

Another way of referring to fractions of a percent. Each basis point equals one 100th of one percent, or .01%.


Principal Balance

The amount owed on a loan. Every monthly mortgage payment reduces the principal balance. Eventually, the loan is repaid, and the principal balance drops to zero. This process is called “amortization.”


Second Mortgage

An additional mortgage secured by the home. Second mortgages can be home equity loans or lines of credit. They are also called “junior liens,” because if the borrower defaults and the property is foreclosed and sold, the lender with the first mortgage gets repaid first. The second mortgage lender only gets repaid if there is enough money from the foreclosure sale. That’s why second mortgages are riskier for lenders and carry higher interest rates.


Loan-To-Value (LTV)

The relationship between the property value and the amount owed against it. The L:TV equals the amount owed, divided by the property value. So if you owe $150,000 against a house worth $200,000, your LTV = $150,000 / $200,000. That’s .75, or 75 percent.