USDA Loans Qualifying and Repayment Income

USDA Guaranteed Rural Home Loans

The USDA Guaranteed Rural Home Loan program was designed to help to moderate to low income families buy homes in designated rural areas with 100%financing and no money down. USDA Guaranteed Rural home loans are some of the most cost efficient ways to finance a home, and give a larger segment of the population an opportunity to own a home, who might not otherwise qualify. USDA home loans also have no monthly mortgage insurance, low closing costs, and are some of the most credit flexible home mortgages available. When determining if you’re eligible for a USDA home loan your mortgage underwriter will look at several qualifying factors including your ability to pay back the loan and if your household annual income does not exceed the income limits for your specified area.

Income Definitions

There are three types of income that your mortgage underwriter will look at when determining if you qualify for a USDA home loan. These are household annual income, adjusted income, and repayment income. Household annual income is defined as all monetary amounts received on your behalf, or any other household member, over a 12 month period. Your mortgage writer will look at your household annual income to determine if you are eligible for a USDA home loan and that your annual household income does not exceed 115% of the average median income for your specified area.

Adjusted Income is used to determine whether or not your household income eligible for payment assistance. This is based on annual income and provides for deductions that account for various household circumstances and expenses.

Repayment Income

Repayment Income is used to determine whether an applicant has the ability to repay the loan, and make monthly mortgage payments. The USDA considers gross income and repayment income as the same thing and is essential when determining if you qualify for a USDA home loan. The first thing your underwriter will look at is if you have stable and dependable income coming in. This usually includes having the same job for at least 1-2 years. Repayment income will be based on the person signing the promissory note. It will also include any anticipated income coming in the next 24 months, non-taxable income such as child support or alimony, vehicle allowances provided by an employer, and projected income.

For more information on whether you qualify for a USDA Guaranteed Rural Home Loan please visit the USDA website or contact your nearest USDA Loan representative.