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UPDATE – Improved Qualifying for USDA Overtime Income, Bonuses, and Commissions

March 20th, 2020 by Sean Stephens

Improved Qualifying for USDA Overtime Income, Bonuses, and Commissions in Florida, Alabama, Tennessee, and TexasIn order to maximize your USDA sales price, calculating all available income is critical!

However, because everyone is not paid the same, it is also important to understand the most recent and updated qualifying guidelines used for calculating USDA overtime income, bonuses, and commissions.

In today’s video, I’ll show you how to make the most out of your USDA loan qualification by reviewing the improved and increased flexibility provided for these types of income sources.

Plus, if you are ready to take the next step towards learning the USDA qualifying process, download our  USDA Blueprint for Success FREE report which is designed to give you an overview of the USDA Home Loan process, eligibility requirements, and much more. Download it now!

UPDATE – Improved Qualifying for USDA Overtime Income, Bonuses, and Commissions

1. USDA Income Guidelines

As a quick review, USDA guidelines group income into two categories:

  1. Annual income is used when calculating USDA Income Eligibility Limits.
  2. Repayment income is used to calculate debt ratios and the USDA maximum qualifying loan amount.

The current Florida, Alabama, Tennessee, and Texas USDA annual income limits can be found here.

As for the income that can be used for determining your loan qualification, USDA provides qualifying flexibility for the follSebring, Avon Park, Lake Placid, Okeechobee USDA Loansowing different types of income sources:

  • Overtime
  • Bonuses
  • Commissions

The good news is that these requirements have recently changed and are now greatly improved!

2. New Guidelines for USDA Overtime Income, Bonuses, and Commissions

USDA previously required a two-year history for income that was earned from overtime, bonuses, and commissions.

However, updated USDA guidelines now only require a one-year history for us to count this income towards your USDA qualifying sales price!

While it is ideal that these types of earnings are from the same place of employment, this is not required either.

Additionally, while the continuance of this type of income will be presumed unless there is documented evidence that the income will cease, USDA guidelines will require that:

Underwriters must analyze overtime for the current pay period and YTD earnings. Significant variances (increase or decrease) of 20 percent or greater in income from the previous 12 months must be analyzed and documented before considering the income stable and dependable.”

3. How do you calculate USDA qualifying income?

Tampa FL USDA Approved Lender List

Most of all, don’t be caught up in calculation confusion!  Let our USDA expertise, efficiency, and program knowledge work for you!

Remember, we are known for our communication and are just a phone call away!

Either call (800) 806-9836 Ext 280 or email SeanS@MPLX.org so we can help identify and properly calculate USDA overtime income, bonuses, or commissions.

In fact, my team and I are built to help walk homebuyers through the USDA process step by step. That is why we take pride in offering several important USDA Free Resources which include important tips, guidelines, and proper qualifying steps.

Find them all here!

 

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