USDA Rural Housing Mortgage Income Limits Increase 2023

USDA Rural Development recently increased the household income limits for the 502 Guaranteed Program. This is great news as this change will permit more families to qualify for the 100% Government-backed mortgage program.

The current USDA income limits are listed below,  these limits apply to most locations in the U.S.  However, more expensive high-cost locations allow even higher income limits.  Please see the income calculator link below.

Family Size 1-4 members:  $103,500
Family Size 5+ members: $136,600

The USDA Rural Housing program provides mortgages to home buyers in eligible rural areas with no down payment needed.  Many popular locations are still eligible and are actually considered “rural”  Buyers shouldn’t assume their area is not eligible before checking the USDA map below.

USDA loans are designed to provide competitive financing to individuals and families who want safe, sanitary, and modest accommodations. These loans are originated by approved USDA lenders and backed by the United States Department of Agriculture Rural Development.

Single-Family Housing  (502 Guaranteed Loan)

Single-Family Housing 502 Guaranteed loan program allows moderate-income individuals and families to own a decent dwelling as their home. This program is ideal for households that don’t have 3, 5 or 10% down payment often required by conventional mortgages.

USDA Mortgage Requirements:

• Household income must be below the set county USDA income limit

• Applicants must personally occupy the property as a primary residence. The property must be located in a USDA-eligible location. Click here to go to map. 🗺️

• Borrowers can get approved through McGill Company , Inc processors if using them to build the home for you with no credit score. 

• Two years of steady employment and income

USDA Rural Development offers many benefits to first-time buyers:

• 101% Financing (Up to Appraised Value)

• Low monthly mortgage insurance (nearly 50% less compared to FHA loans)

• No Down payment Needed – 100% financing.

• NOT reserved exclusively for first-time home buyers, the program can be used by move-up buyers as well.

• No bank or saving reserves required

• No limit on seller concessions, the home seller can pay all closing costs.

• 100% Gift Allowed from family, etc.

• Easy credit score guidelines ( 620 score is golden but not needed)

• No maximum purchase price or loan amount limit. Buyers qualify based on their debt and income

• A secure low 30-year interest rate

• Any single-family home (in good overall repair) is eligible. The home must be located in a USDA approved area.

• No special home buyer class to get started. Get qualified with a letter of pre-approval and start house shopping in the same day!

How may funds be used?
Loan funds may be used to help low-income individuals or households purchase homes in rural areas. Funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities.

How much may I borrow?

Using the Single Family Housing Direct Self- Assessment tool, potential applicants may enter information online to determine if the Section 502 Direct Loan Program is a good fit for them prior to applying.  The tool will provide a preliminary review after a potential applicant enters information on their general household composition, monthly income, monthly debts, property location, estimated property taxes, and estimated hazard insurance.  Potential applicants are welcome to submit a complete application for an official determination by USDA Rural Development (RD) regardless of the self-assessment results.  Upon receipt of a complete application, RD will determine the applicant’s eligibility using verified information and the applicant’s maximum loan amount based on their repayment ability and the area loan limit for the county in which the property is located. 

What is the interest rate and payback period?

• Effective June 1, 2024, the current interest rate for Single Family Housing Direct home loans is 4.75% for low-income and very low-income borrowers.

• Fixed interest rate based on current market rates at loan approval or loan closing, whichever is lower

• Interest rate when modified by payment assistance, can be as low as 1%

• Up to 33 year payback period - 38 year payback period for very low income applicants who can’t afford the 33 year loan term

How much down payment is required?
No down payment is typically required. Applicants with assets higher than the asset limits may be required to use a portion of those assets.