USDA rural home loans
USDA income limits: whose income counts and which deductions apply
USDA's income test trips up households that look well under the limit. The program counts the income of everyone in the household, not just the borrowers, then subtracts specific deductions. Run the numbers its way before you count on it.
Reviewed November 2026 · Written for Buy Home Tips from the sources listed below
USDA's guaranteed loan has two separate income questions. The first asks whether your household earns too much for the program. The second asks whether the borrowers earn enough to repay the loan. They use different definitions of income, and confusing them is the most common reason buyers misjudge their eligibility.
Three kinds of income
The federal rules for the program, in 7 CFR 3555.152, define:
- Annual income: the income of all household members, whether or not they will be on the loan. The lender verifies income for each adult household member for the previous two years and projects expected income for the next 12 months.
- Adjusted annual income: annual income minus the verified deductions the household qualifies for. This figure is compared with the limit. Under 3555.151, a household's adjusted income must not exceed the applicable moderate income limit at loan approval.
- Repayment income: the stable, verifiable income of the people signing the note, used to judge whether they can afford the payment.
What is left out of annual income
The rules list sources that are not counted, including:
- Earned income of household members under 18, unless they are an applicant or the spouse of a household member
- Payments for the care of foster children or foster adults
- Amounts for, or reimbursing, medical expenses
- Temporary, nonrecurring or sporadic income, including gifts
- Lump sums such as inheritances and insurance settlements
- Earned income tax credits and the full amount of student financial aid
- Income of live-in aides
Net family assets matter too: the rules add actual or imputed income from assets such as savings and investments, though they exclude, for example, cash that will reduce the loan amount and money in retirement accounts like IRAs and 401(k) plans.
Deductions that lower adjusted income
Adjusted income subtracts deductions the household qualifies for, including:
- An amount for each household member other than the head of household or spouse who is under 18, an adult with a disability, or a full-time student
- Reasonable, unreimbursed childcare costs for children 12 and under that enable a household member to work, look for work or study
- Certain unreimbursed costs of caring for household members with disabilities above 3 percent of annual income
- A deduction for elderly families, and for elderly and disabled families, certain medical costs above 3 percent of income
Repayment ability is a separate test
Passing the income limit does not mean the payment fits. Under 3555.151, the agency's standard ratios are 29 percent of repayment income for the housing payment, including taxes, insurance, association dues and the annual fee, and 41 percent for total debt. Higher ratios can be allowed with compensating factors, through the automated underwriting system or with documented exceptions.
Check your numbers
Use USDA's eligibility site to look up the limit for your area and household size, and to run a preliminary calculation. Then ask a USDA-approved lender to confirm it with your documents. If you are close to the limit, a change in household members or a raise before closing can matter, so tell your lender about anything that changes.
Mini calculator: your income against the USDA limit
Look up the guaranteed-loan income limit for your county and household size on USDA’s eligibility site, then compare it with your household income.
The default limit is only a placeholder. Use the figure the USDA eligibility site shows for your county.
Prepare your income check
- List every adult who will live in the home and their income.
- Gather two years of income records for each adult household member.
- Note income that USDA rules exclude, such as earned income of minors.
- Total childcare costs for children 12 and under that allow someone to work.
- Look up your area's limit on USDA's eligibility site for your household size.
- Ask a USDA lender to confirm the calculation before you make an offer.
Questions buyers ask
Whose income counts for USDA eligibility?
Annual income includes the income of all household members, whether or not they will sign the loan. Federal rules exclude some sources, such as the earned income of household members under 18 who are not applicants or spouses.
What is the USDA income limit?
The guaranteed program uses a moderate income limit, which USDA Rural Development describes as 115 percent of the area median income. Limits vary by area and household size, and USDA's eligibility site shows the figure for yours.
Can deductions lower my income for USDA?
Yes. Adjusted annual income subtracts verified deductions such as an amount for each qualifying dependent, reasonable childcare for children 12 and under that enables work or education, and certain disability and elderly household deductions.
Is USDA income the same as the income used to qualify for the payment?
No. Repayment income is the stable income of the people signing the note, used to test whether they can afford the loan. Household annual income is used to test program eligibility.
Sources checked for this page
- 7 CFR 3555.152: calculation of income and assets
- 7 CFR 3555.151: eligibility requirements
- USDA: income and property eligibility site
- USDA Rural Development: Section 502 guaranteed loan program
Checked November 2026. Programs and limits change; confirm with the source before you rely on a figure.