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2019 USDA Loan Income Limits & USDA Eligibility Check

The Newsdesk
The Mortgage Reports contributor

USDA eligibility

In this article:

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.

USDA eligibility for a 1-4 member household requires annual household income to not exceed $82,700 in most areas of the country, but up to $209,150 for certain high-cost areas, and annual household income for a 5-8 member household to not exceed $109,150 for most areas, but up to $276,100 in expensive locales.

This USDA loan information is accurate as of today, October 13, 2019.

Verify your USDA loan eligibility. (Oct 13th, 2019)

USDA loans: low rates with no down payment

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. The program 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.

Get started on your USDA loan here. (Oct 13th, 2019)

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, October 13, 2019.

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 include a $2,000 upfront mortgage insurance premium, plus a monthly $58.33 payment for mortgage insurance. You can choose the add the upfront mortgage insurance to your loan amount so you needn’t pay it out-of-pocket.

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.

Verify your new rate (Oct 13th, 2019)

USDA loan income requirements

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 more flexible. Applicants don’t need to meet every requirement to the last letter in order to secure loan approval.

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 program’s purpose is helping those with “modest means” achieve homeownership.

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.

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

  • 1-4 member household : $82,700
  • 5-8 member household : $109,150

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 2019 USDA income limits for a 1-4 member household is $209,150, and $276,100 for a household of eight.

USDA income limits in Raleigh, North Carolina start at $96,950.

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

Look up 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.

Shop and compare USDA lenders here. (Oct 13th, 2019)