USDA Loan Income Limit Eligibility
The USDA loan program is designed to assist homebuyers in purchasing real estate in rural areas. We’re talking about mortgages with no money down, lower mortgage insurance fees compared to FHA financing, more attractive credit requirements, and fixed rates that will not change during the life of the loan.
However, no one is just giving out such loans. You have to qualify, and that brings us to a program oddity: USDA income limits because the program is only open to low- and moderate-income buyers.
The 2026 USDA loan income limit for households with 1-4 members is $119,850, or $158,250 for households with 5-8 members, in most U.S. counties. To be eligible for a USDA home loan, total household income should not exceed these limits; however, income limits can vary by location to account for regional cost-of-living differences. These limits are normally updated annually in June.
“USDA's purpose is to assist very-low, low, and moderate-income households,” said Dan Bartelt, Underwriter & Expert Reviewer at Neighbors Bank. As a result, USDA loans take into account the 'annual income' for all adult household members. The limits are set annually based on the area where you are purchasing and the household size. To qualify for USDA financing, the annual income of all adult household members must be analyzed to ensure it is below the current income limit. An applicant will be ineligible for USDA financing if the annual household income were to exceed the current income limit.”
Find the income limits where you want to live.
Households with 1-4 members have different income limits when compared with households that include 5-8 people. Similarly, applicants living in high-cost counties have higher income limits than those living in counties with lower costs,
For example, in Honolulu, the income limit for a household with one to four members is $160,050, and $211,300 for a household with five to eight people. These figures are significantly higher than the $119,850/$158,250 limits found in most areas.
And what if a household has more than eight members? The government has this figured out. If a household exceeds eight members, the applicant receives 8% of the 4-person limit for each additional member.
The USDA uses annual household income for the limit measurement and considers expected income for the coming year. Household earnings include income received by all adult members of the household, regardless if the household member is on the loan or not.
For example, if the applicant, the applicant’s spouse, and the applicant’s adult brother share a home, annual wages from all three are included in the calculation.
The USDA requires lenders to project household income for the coming 12 months using historical data, such as W-2s and current pay stubs.
The USDA income limit is determined by gross income, the amount before any payroll deductions. This income includes salary, overtime, commission, tips, bonuses, and any compensation for services. Income may also include housing allowances and cost-of-living allowances.
"A common misconception about USDA income limits is how they’re calculated,” said Dan Bartelt, Underwriter & Expert Reviewer at Neighbors Bank. Lenders sometimes take a ‘best-case’ approach, but the proper method is to analyze expected income for the next 12 months beyond the closing date. Often, we can identify one-time payments or limited receipt incomes that shouldn't count toward eligibility, sometimes making the difference in qualifying for the USDA program."
If a member of the household is a small business owner or farmer, the net income from operations is applied.
Mortgage lenders can have additional guidelines regarding income and employment to qualify applicants.
The USDA provides certain income exceptions when computing income limits.
A few of the more common income categories that do not count towards the USDA’s income limits include:
There are other situations where income does not count toward your USDA loan’s income limit. Lenders will also consider various factors to determine your repayment income, including a comparison of your monthly income and monthly debts, known as the “debt-to-income” ratio (DTI).
It may seem that since the USDA program is intended for low- to moderate-income borrowers, there is a limit on the types of homes they can purchase. Instead, unlike other loans such as FHA financing, the USDA does not set loan limits; it instead bases maximum loan amounts on the borrower's ability to qualify.
Since there is no maximum loan limit with the USDA Guaranteed Loan, your preapproved loan amount will be determined by several factors, including:
For specific information, speak with a home loan specialist to determine if you meet the USDA’s income requirements.
