Calculate the USDA Home Loan You Qualify For
Use our USDA Home Loan Qualification Calculator to determine what size USDA mortgage you qualify for and how much home you can afford based on several factors including your monthly gross income and debt expense as well as your down payment, interest rate and loan term. Our calculator enables you to review an unlimited number of scenarios to understand the loan you can afford and to determine if USDA Program meets your financing objectives.
How Our USDA Home Loan Qualification Calculator Works
You can use the USDA home loan program to buy a home located in a designated rural area with no down payment, which makes home ownership possible for more people. The mortgage amount you can afford depends on many factors including how much money you make, your debt payments, mortgage terms and debt-to-income ratio.
The USDA home loan program uses a lower debt-to-income ratio that other mortgage programs which impacts your loan amount. Our calculator enables you to understand the USDA home loan you qualify for and what price home you can afford to buy based on this debt-to-income ratio and the following information:
Gross Income. This is your monthly income before deductions such as taxes, social security, medicare and retirement account contributions. The higher your gross income, the greater the USDA home loan you qualify for. Please note that the USDA home loan program applies borrower household income limits so if you earn too much money you may not be eligible for the program.
Monthly Debt Expense. This is your total monthly debt expense including payments for credit cards as well as auto, student and personal loans. Please use your monthly expense and not your total debt balance. For example, if you make a $365 monthly payment on a $4,750 credit card balance, you include $365 in your debt expense and not $4,750.
Interest Rate. This your mortgage rate, or the cost of borrowing money from the lender. The lower your interest rate, the greater the mortgage you qualify for and the lower your rate, the lower the mortgage you qualify for. USDA mortgage rates tend to be lower which means you may be able to afford a higher loan amount.
Mortgage Term. This is how long your loan is. Most USDA home loans are 15 or 30 years. The shorter your mortgage, the smaller the mortgage you can afford and the longer your mortgage, the higher the loan amount you can afford.
Down Payment. This is the amount of money you contribute when you buy a home. The USDA Home Loan Program does not require applicants to make a down payment but you may decide to make one.
Our calculator provides the following information about the USDA home loan you can afford:
Estimated USDA Mortgage for You Qualify For. The USDA mortgage you qualify for is based on your monthly income and debt expenses. The more money you make and less debt expense you have, the higher the loan amount you qualify for.
What Price Home You Can Purchase With a USDA Home Loan. The price of the property you can afford to buy with a USDA mortgage depends on your loan amount and the size of any down payment you decide to make. The greater your down payment and mortgage, the more expensive the property you can purchase.
Mortgage Payment. This is your monthly payment based on the mortgage you qualify for, your interest rate and the length of your loan.
Total Monthly Housing Cost Plus Debt. This includes your mortgage payment, property tax, homeowners insurance and monthly USDA mortgage insurance fees plus your non-housing related loan payments. Monthly housing cost plus debt enables you to determine your total monthly debt payments so you can better manage your finances.
USDA Mortgage Insurance. Also called guarantee fees, the USDA home loan program requires you to pay upfront and monthly mortgage insurance fees which protect the lender in case you cannot repay your loan. The guarantee fees are calculated as a percentage of your mortgage amount so the higher your loan, the greater the fees.
What Borrowers Should Know About a USDA Home Loan
No Down Payment Required
The USDA home loan program enables borrowers in rural communities to buy a home with no down payment. Saving money to pay for a down payment is one of the biggest obstacles to buying a home so enabling borrowers to qualify for a mortgage with no down payment is a major benefit. Although borrowers are required to pay an extra upfront and ongoing monthly USDA mortgage insurance (guarantee fee), the USDA home loan program makes home ownership more affordable and accessible to borrowers in rural areas.
Low Interest Rate
The interest rate for USDA mortgages is lower than the interest rate for many other no or low down payment home loan programs. USDA home loans have lower interest rates because the mortgages are insured by the U.S. government and because program participants pay mortgage insurance, which protects lenders in the event of default. Paying a lower interest rate reduces your mortgage payment and total monthly housing expense and saves you thousands of dollars in total interest expense over the term of your mortgage. Use our USDA Home Loan Qualification Calculator to determine how a lower mortgage rate positively affects your loan payment.
Borrower Qualification Requirements
USDA home loan program borrower mortgage qualification guidelines are more conservative than other no or low down payment mortgage programs such as the FHA home loan program. The USDA home loan program requires a minimum credit score of 620 as compared to 580 for the FHA program. Additionally, in most cases you are permitted to spend a maximum of 29% of your monthly gross income on total housing expense which includes your mortgage payment, property tax, homeowners insurance, USDA guarantee fees and other applicable costs. Additionally, the USDA home loan program uses a borrower debt-to-income ratio of approximately 41% to determine what size loan you qualify for as compared to a debt-to-income ratio of 43% or higher for the FHA mortgage program. Our USDA Home Loan Calculator uses this debt-to-income ratio to determine your loan amount. Using a lower debt-to-income ratio means that borrowers qualify for a smaller mortgage amount.
Property Eligibility Guidelines
The home being financed with a USDA loan must meet certain eligibility guidelines in terms of location and property type. The home must be located in a USDA-designated rural area. 95% of the U.S. representing over 100 million people is designated as a USDA rural area. Additionally, the property must be a single-family residence such as a home, condominium, townhouse or modular home. The property must also be in good condition according to the appraisal report.
No Loan Limits But Income Limits Apply
Unlike other no or low down payment mortgage programs, the USDA home loan program does not use loan limits that put a cap on your mortgage amount. Instead, the USDA program applies borrower income limits that put a cap on how much money you can make. In short, if your total household income is too high, you may be ineligible for the program. The limit is based on the gross income for all members of the household that occupies the property being financed. For example, if your aunt intends to live in the home with you then her income is included to determine if you qualify for a USDA mortgage, even if she is not on the mortgage or is not on the property title. The income limit for the USDA home loan program is usually 115% of the median household income for the area where the property is located.
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Sources
"Chapter 11: Ratio Analysis." Single Family Housing Guaranteed Loan Program Technical Handbook. U.S. Department of Agriculture, 2020. Web.