USDA home loan income limits depend on your location, household size, and which USDA loan program you’re applying for. The two main programs, the Guaranteed Loan and the Direct Loan, use different income thresholds. Both are designed to help buyers in rural and suburban areas, but the Guaranteed program serves moderate-income households while the Direct program is reserved for low and very-low-income applicants.
How USDA Sets Income Limits
USDA income limits are not a single national number. They’re calculated county by county based on local median family income, then adjusted for household size. The limits are split into two tiers: households of 1 to 4 people, and households of 5 to 8 people. Larger households get a higher ceiling because USDA recognizes that more people in a home means more expenses.
You can look up the exact limit for your county using the USDA’s online eligibility tool at rd.usda.gov. The figures change annually as median incomes shift, so always check the current numbers for your specific area before assuming you qualify or don’t.
Guaranteed Loan Income Limits
The Section 502 Guaranteed Loan is the more widely used USDA program. It’s offered through private lenders (banks, credit unions, mortgage companies) and backed by USDA, similar to how FHA or VA loans work. To qualify, your household income cannot exceed 115% of the area median income for your county.
In practice, the formula is slightly more complex. USDA defines the moderate-income limit as the greater of three calculations: 115% of the U.S. median family income, 115% of the average of the statewide and state non-metro median family incomes, or 115/80ths of the area low-income limit. This layered approach prevents the limit from dropping too low in counties with depressed wages. In many parts of the country, the resulting threshold is well above $100,000 for a four-person household, and in higher-cost areas it can be significantly more.
For households larger than eight people, USDA adds 8% of the four-person limit for each additional person beyond eight.
Direct Loan Income Limits
The Section 502 Direct Loan is funded and serviced by USDA itself, not a private lender. It offers subsidized interest rates that can go as low as 1% with payment assistance, making it a powerful option for buyers with very limited income. The trade-off is a stricter income ceiling: your adjusted household income must be at or below the low-income limit for your area.
Low-income limits are typically set at 80% of the area median income, which is considerably lower than the 115% threshold for the Guaranteed program. A household that earns too much for the Direct program may still qualify comfortably for the Guaranteed loan.
What Counts as Household Income
This is where many applicants are caught off guard. USDA does not just look at the income of the people on the mortgage application. It counts the income of every person expected to live in the home. If your adult child, parent, or sibling will be living with you, their earnings are included in the household total, even if they won’t be on the loan.
Temporarily absent household members also count. A spouse working in another city or a college student living in a dorm during the school year is still considered part of the household, and their income is factored in. If someone’s absence is permanent and they’re not on the loan, their income is excluded.
Income That’s Excluded
Several types of income are left out of the calculation. Earned income from household members under 18 is excluded entirely. For full-time students aged 18 or older who are not the applicant or spouse, only the first $480 of earned income per year counts toward the household total. Any amount above $480 is excluded. However, unearned income for those students, such as Social Security benefits, is counted in full.
Foster children and adults are not considered household members, and payments received for their care are excluded from income. Live-in aides are also excluded. Temporary, nonrecurring, or sporadic income, including gifts, does not count.
Deductions That Lower Your Adjusted Income
For the Direct Loan program, USDA calculates an “adjusted income” by subtracting specific deductions from your total annual household income. This adjusted figure is what gets compared to the income limit, so these deductions can make the difference between qualifying and falling just over the line.
- Dependent deduction: $480 per qualified dependent. A qualified dependent is a household member (other than the applicant, co-applicant, or spouse) who is 17 or younger, has a disability, or is a full-time student.
- Child care expenses: Unreimbursed costs for caring for children age 12 and under, if the care allows a household member to work, look for work, or attend school. The deduction can’t exceed the income of the person enabled to work, unless the care supports schooling or job searching.
- Elderly household deduction: A flat $400 deduction if the applicant or co-applicant is 62 or older or has a disability. This is a one-time household deduction, not per person.
- Disability assistance expenses: Unreimbursed costs for attendant care, medical equipment, wheelchairs, ramps, vehicle adaptations, interpreters, and similar needs. Only the portion exceeding 3% of annual household income qualifies, and the deduction can’t exceed the earnings of the person enabled to work by the assistance.
- Medical expenses: Available only to elderly households (where the applicant or co-applicant is 62+ or has a disability). Unreimbursed medical expenses for the entire household can be deducted if they exceed 3% of annual income. These are projected for the coming 12 months.
How to Check Your Eligibility
USDA maintains an online income eligibility calculator at rd.usda.gov where you select your state, county, and household size. The tool shows you the exact income limit for both the Guaranteed and Direct programs in your area. It’s updated when new limits take effect, so the figures reflect current thresholds.
When using the tool, remember to enter the income of everyone who will live in the home, not just the borrowers. If your total household income is close to the limit, factor in the deductions described above (particularly for the Direct program) to see whether your adjusted income falls below the cutoff. Lenders processing Guaranteed loans will also verify your household income during underwriting, so an initial self-check on the USDA site can save time before you formally apply.