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USDA Home Loan Adjusted Annual Income

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USDA No Money Down Loans are one of the most requested programs of ANY loan program we do.  We recently had two different families buying a home in North Carolina who had been told that they didn’t qualify for the program – who actually did.  The problem for them was that the Loan Officer they originally talked to was not aware of the Adjustments you can make to Household Annual Income.
In one case, a grandmother lived in the home.  She was not going to be on the mortgage loan, but the loan officer counted her income – taking the family over the maximum income limit for the County.  The Grandmother was disabled – and as you can see below, her income did not have to be counted, so the family is buying a new home, and moving at the end of the week!
The second family that contacted us live near a college, and in August, an 18 year old nephew is moving with them while he attends college.  We have all of the documentation regarding his attendance to the school, and all correspondence lists his Aunt’s home address as his address – that works!  The difference between having 4 family members in the household and having 5 meant that this family is NOT over the income limit and they can buy a home!
If you have questions about the USDA Home Loan Income Calculations, or you want to know more about No Money Down Loans, please call Steve and Eleanor Thorne 919 649 5058.  We do tons of these loans every month, and we know the guidelines!

USDA Loan Guidelines – Adjusted annual income

1980.348  Adjusted annual income

Place in the Country in NCAdjusted annual income is annual income as determined in §1980.347 of this subpart less the following:

(a)  A deduction of $480 for each member of the family residing in the household, other than the applicant, spouse, or co-applicant, who is:

(1)  Under 18 years of age;

(2)  Eighteen years of age or older and is disabled as defined in §1980.302(a) of this subpart; or

(3)  A full-time student aged 18 or older.

(b)  A deduction of $400 for any elderly family as defined in §1980.302(a) of this subpart.

(c)  A deduction for the care of minors 12 years of age or under, to the extent necessary to enable a member of the applicant/borrower’s family to be gainfully employed or to further his or her education.  The deduction will be based only on monies reasonably anticipated to be paid for care services and, if caused by employment, must not exceed the amount of income received from such employment.  Payments for these services may not be made to persons whom the applicant/borrower is entitled to claim as dependents for income tax purposes.  Full justification for such deduction must be recorded in detail in the loan docket.

(d)  A deduction of the amount by which the aggregate of the following expenses of the household exceeds 3 percent of gross annual income:

(1)  Medical expenses for any elderly family (as defined in §1980.302(a) of this subpart).  This includes medical expenses for any household member the applicant/borrower anticipates incurring over the ensuing 12 months and which are not covered by insurance (e.g., dental expenses, prescription medicines, medical insurance premiums, eyeglasses, hearing aids and batteries, home nursing care, monthly payments on accumulated major medical bills, and full-time nursing or institutional care which cannot be provided in the home for a member of the household); and

(2)  Reasonable attendant care and auxiliary apparatus expenses for each disabled member of any household to the extent necessary to enable any member of such household (including such disabled member) to be employed.

More Information on USDA Loans, and USDA Frequently Asked Questions

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Comments

  1. Hi Eleanor, my question is regarding qualifying for the USDA program. Specifically, is the income of all members of the home used to qualify for the mortgage (w/o being added to the loan) or is it just the applicant’s income being considered and the household income can’t exceed the guidelines?

  2. Okay – so you’ve picked up on the quandary with USDA Home Loan Income and Qualifying. There are actually two things we look at. First – we look at the “Household” income. Household income includes money from anyone who is working (that’s over 18) in the house. We CAN adjust that number, for instance, we can deduct child care. There are SEVERAL things we can do to make adjustments (call us, many loan officers are not familiar with what USDA allows).

    Second part of the income we look at for USDA Home Loans is the QUALIFYING income. Qualifying income is money that shows up on a Tax Return – for a consistent period of time, that is likely to continue for at least 3 years after closing. You might have a parent living in the house, who would have income that is considered for household income – but they are not going to be on the loan – therefore, we would not include their income for qualifying purposes.

    I hope this help – please do call us so we can answer your specific questions 919 649 5058

  3. Good Morning,

    I have been enagaged for three years now. My Fiancé and I would like to purchase a home using the USDA loan. We aren’t married so would I have to use his income? Would I be qualified for the adjustment? or would there be an another option?

  4. We are a family of 4 living in Onslow Co. our children are 17 & 18 both full time students, our 18 year old will graduate and will be a full time college student in the fall. What would be the max. income for us? Thanks so much!!

  5. NO – we will need to get the transcripts showing they are a student. We do this pretty often and would love to help you buy! I love that part of our state, coast! 919 649 5058

  6. So sorry I haven’t contacted you as of yet. Family emergency had to be handled. Does it make a difference if I have already been prequalified for an FHA loan with a mortgage co? The issue is we have to put a down payment and due to our family issues we have had to use money saved for the down payment. My husbands uncle passed unexpectedly and he had to help get his estate settled. . My loan officer suggested I contact you for help. Our income together is around $86,000 a year. The home we are interested in is priced at $199,00. Do you think that NC Housing can help. My loan officer told me that we could possibly let y’ll do the entire loan. Thanks!

  7. Hi My husband & I live in Onslow County, & have rented for 7 years &. finally found a home in the same neighborhood. We want to put money down, but at this moment my inheritance is just weeks away, & the seller wants 5,000 to hold this house or it goes on the market ASAP !! We are retired since 2006 & have a retired disability pension of $50,000 a year & the house is $122,000. which we know we can well afford since we pay $1000 a month now for last 7 years!!! How do we go about this? & do we give him 5000? & then if we don’t qualify does HE GET TO KEEP THAT MONEY?

  9. So are they looking at pre or post tax dollars when calculating the cap?? I just did a rough calculation for pre-tax dollars made and it would appear that we would be just over the cap for the surrounding Raleigh area, but post tax dollars we would probably be under it.

    Thanks,

  10. Anastasia, it is pre-tax. However, there are some things we can deduct from income, like child care. There are other programs, however, that will allow us to qualify the borrower with no bonus, overtime, etc. – and if you qualify with only one salary, we can just use that qualifying income to be under the caps. Please feel free to call us, 919 649 5058

  11. I am currently in bankruptcy (2 years in October). I have excellent payments as they deduct it from my paycheck each month. My credit score is 611. Can I qualify for the USDA loan assistance? I really hope so. I’ve been working so hard towards fixing my credit and getting into my home.

I try and answer all questions :)