USDA Rural Development Mortgage Guidelines

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Mortgage Income Requirements

The income requirements for this government program, USDA Rural Development home mortgage are rather confusing and require a lot of explanation.  If you still have questions after going through this information send an email and I'll try to explain further.

First of all this program has a maximum limit on how much money you can make and it is based on the median income of the area where you live.  The "Direct Loans" only allow 80% of the median income.  The "Guaranteed Loans" allow 115% of the median income.  These limits are adjust by household size, the number of people living in the house.

This mortgage loan looks at two types of qualifying income.  The first is called household income and it verifies the income of ALL household members.  The second is called repayment income and it verifies the dependable income of parties to the note. (borrower and co-borrower)

Household Income

All gross household income must be counted toward the income limits.  This chart might make it easier to understand as the limit increases with each family/member of the household.  This chart is just an example to help you understand how it is calculated.  The actual chart USDA uses is different from county to county and will change from year to year. To see the actual limits for your county you would have to locate it on their web site.

Household Size

 
# of People

1

2

3

4

5

 
Income  Limit

$57,300

$65,500

$73,700 

$81,800 

$88,400

So, if you have 3 people in your household and your gross combined income is greater than $73,700 then you would not qualify for this loan.  This program is really focused at getting median income families into homes and that is a good thing.

To make matters more confusing, there are one time adjustments that may be made to your combined gross income. 

  • $450 may be deducted from the gross per household member who is:  Under 18 years old,  18 or older than 18 if they are disabled, or 18 or older than 18 if they are a full time student.
  • $400 may be deducted for an elderly borrower.  Defined as an applicant who is 62 or older, or disabled.
  • Medical expenses not covered by insurance for an elderly member that exceeds 3% of gross annual income.
  • 100% of child care for minors 12 years old or younger to the extent necessary to enable the borrowers family to be gainfully employed or to further their education.  Payment cannot be made to persons that can be claimed as a dependent.

Repayment Income

The repayment income, of parties to the note, is verified and documented by the underwriter as to it's dependability.  Income such as overtime, bonus, commissions, and self employment must be consistent and having a history of at least two years.

Non-Taxed income may be grossed up and documented

Now that you understand how all this works there is an easy way to find out if your income qualifies.  The USDA has a special on line calculator.  It's simple and quick  Check your income on the USDA website.

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