When you think of the United States Department of Agriculture (USDA), mortgages are probably the last thing that comes to mind. Yet, the USDA offers competitive home loans with $0 down for eligible borrowers seeking a home down in non-urban areas. Now, it’s easier than ever before to qualify for a USDA home loan and participate in rural development.
This link will tell you if the properties you are touring are eligible. Link to check property eligibility
As of May 4, 2020, income eligibility for USDA home loans has expanded to include even more borrowers. That’s good news for Massachusetts residents, who experience high costs of living in densely populated areas.
Want even better news? Most of Massachusetts is designated as eligible for a USDA home loan!
Read on to discover how Bay State residents can take advantage of these new income eligibility requirements for USDA loans.
How is eligibility determined?
Eligibility for a USDA home loan is determined by household size and income. These factors are then measured against your county’s income limits, as determined by the USDA. If your income is at or below your county’s income limits and you can repay the loan, you’ll most likely qualify for the mortgage.
So, where does a New Englander fit into this scenario? Well, let’s take a look at some counties right here in Massachusetts.
Let’s begin in Suffolk County, MA, where Boston is located. Below is the Income eligibility for USDA home loans in the Boston area:
- Household size 1-4: $154,900
- Household size 5-8: $204,450
If your total income corresponds with the indicated number of household members, you’re in a great spot to begin exploring a USDA loan. Still have questions? Click here to search income limits by household size in your area.
Where in Massachusetts can I move to with a USDA loan?
Under the USDA’s eligibility guidelines, the majority of land in Massachusetts meets the requirements for a USDA loan. This is great news for anyone looking to settle down in a less congested community.
Click here to explore the USDA’s eligibility map. Type in the Massachusetts city or town you’d like to move to, and learn whether the area is eligible for using a USDA loan.
Areas in orange are not eligible. You’ll see just how many choices you have and how far a USDA loan can take you.
Next, we’ll explore how income is calculated so that you can make your best move.
How is my income calculated?
We’re all aware that life in the Bay State typically carries with it a high cost of living. The USDA, therefore, determines income limits at the county level, instead of using national averages.
Determining eligibility in this way ensures the loan doesn’t become a “one size fits all” program. Essentially, using county-specific income metrics accommodates the needs of residents in high-income areas by scaling their income against local economic realities, rather than impersonal national averages.
Here are important things to consider relating to your income eligibility for USDA home loans:
- Be prepared to project household income for the next 12 months with tax records and pay stubs.
- The USDA sets income limits by gross income unless a member of your household is a small business owner or farmer. In this case, net income is used to calculate eligibility.
- Mortgage lenders may have additional income and employment guidelines before connecting you with a USDA loan. A trusted mortgage broker will help you sort through what may be additionally required.
Remember, income is regarded as what money is earned by adult members of the household. This includes the applicant’s income, as well.
You may be wondering if there’s any income that isn’t counted when applying for a USDA home loan. Yes, there is. Below are some examples of income that won’t be counted when applying:
- Earned income tax credits
- Any income earned by a legal minor
- Housing assistance payments (Section 8 programs)
- Income over $480, made by a full-time adult student
- Capital gains, inheritance, lump-sum payments
Speak with a mortgage broker to get a better idea of where your income fits into qualifying for this kind of loan. You may have more options open to you.
How much loan can I get?
The USDA does not impose borrowing limits on the kind of home someone can by simply because the program is geared towards low to moderate-income buyers.
Qualifications in this way are like many other standards loan products. The USDA considers your credit score, debt and income, assets, liquid savings, along with previous rental and mortgage history.
As with any home purchase, it’s best to consult a knowledgeable mortgage broker to see what works best for you and your specific situation.
Are you interested in a $0 down USDA home loan?
With newly expanded income eligibility for USDA home loans, it’s now easier to start your journey to homeownership. These loans are game-changers for anyone looking to purchase a home in a less populated area of Massachusetts.
No matter who you are or where you currently live, there are options for low and moderate-income earners to buy a home in a rural setting.
We know what it takes to get people approved for a USDA home loan. Let’s discuss how we can get you on the journey home.
Get in touch to discuss your options with a member of the MBA Mortgage team.