USDA loans · 7 CFR 3555USDA loan eligibility: the household income limit, the rural area and the 29/41 ratios
The USDA Single Family Housing Guaranteed Loan Program has its own rules in 7 CFR part 3555. At loan approval, the household's adjusted income must not exceed the moderate income limit (§3555.151(a)) – and the household means everyone routinely living in the home, not just the people on the loan (§3555.10). The moderate income limit is the greatest of 115% of U.S. median family income, the average of the state-wide and state non-metro median, or 115/80ths of the area low-income limit for the household size (§3555.10). The home must be the borrower's principal residence – no investment or short-term housing – and must be in an area Rural Development designates as rural (§3555.201(a)); vacant land, farms or income-producing property are not eligible. Repayment is adequate when housing costs are no more than 29% and total debt no more than 41% of repayment income (§3555.151(h)). The guaranteed loan must be in first lien position at closing (§3555.204(b)).
The main rules (7 CFR 3555)
Household income
Adjusted income of the whole household within the moderate income limit at loan approval.
Who counts
Everyone routinely living in the home, except live-in aides and foster children or adults.
Rural area
Only in areas Rural Development designates as rural; a contract completed before a re-designation may still be approved.
Occupancy
Principal residence only – no investment or temporary housing.
Ratios
Housing (PITI, HOA dues, annual fee) up to 29%; total debt up to 41% of repayment income.
Site
Typical size for the area; no income-producing land; all-weather road access; adequate utilities and water.
What the TC checks early
- That the address is in a USDA-eligible rural area before the financing deadline gets close.
- Whether adults in the household who are not on the loan have income – it counts toward the limit.
- A property with acreage, outbuildings rented out or a farm operation – ask the lender before the option or due diligence period ends.
Who USDA is for
- Moderate-income buyers who will live in the home.
- Current owners only in limited cases – the current home no longer meets the household's needs and other conditions.
- U.S. citizens, U.S. non-citizen nationals and qualified aliens.
Questions buyers ask
Does USDA count the income of everyone in the house?
Yes for the income limit: the household's adjusted income must be within the moderate income limit, and the household includes everyone routinely living in the dwelling, with narrow exceptions (7 CFR 3555.10, 3555.151(a)).
What debt-to-income ratios does USDA use?
Housing costs up to 29% and total debt up to 41% of repayment income (7 CFR 3555.151(h)).
Can I buy a farm or rental property with a USDA loan?
No. The home must be your principal residence, and income-producing land or property used primarily for agriculture or commercial purposes is ineligible (7 CFR 3555.151(c), 3555.201(b)).
Related guides
Mark the deal as USDA in ClosingCode – the loan program sits with the deal's facts, next to the financing deadline you track.
Start free trialSource: 7 CFR 3555.10, 3555.151, 3555.152, 3555.201 and 3555.204 (eCFR, read October 25, 2026).
General information, not legal or financial advice. USDA publishes the income limits and rural-area maps, and the lender applies the current program handbook. ClosingCode is software; it is not a lender. This guide is not a substitute for the advice or services of an attorney.