Learn the Pros and Cons of USDA Home Loans
What are the disadvantages of USDA loans?
Even though the USDA loan is advantageous, obtaining one has some drawbacks. Some of the most significant are income and location constraints.
Income Cap
Because the USDA loan is intended to assist poor to moderate-income families, there are income limits on how much you can make while still qualifying for the program. It’s not just your income either; the USDA uses the income of your entire household to determine if you qualify.
So, if you have many working family members in your home, all income from working family members must be counted. In general, you must earn less than 115% of your area’s annual median household income. Because family size does important, the income cap is higher if you have 5 or more people in your home.
Households of 1-4 members – $91,900
5-8 Member Households – $119,200
2022 Louisiana USDA Income Limits
Restrictions on Location
Another significant disadvantage of the USDA Loan is the property location restriction. Because it is a Rural Development loan, it cannot be used within major city limits. The USDA classifies this as a city with a population of more than 35,000 people.
Most suburbs will be eligible for USDA Rural Development Loans as long as you do not live in one of the top ten major cities in the United States. If you live in Louisiana, you can use the program to buy property in the suburbs of New Orleans, Shreveport, Baton Rouge, Lafayette, Lake Charles, Alexandria, West Monroe, and other cities.
You may buy a home without a down payment if you are prepared to extend your community for a few minutes.
