© 2018 RHS HB-1-3555 SFH Guaranteed Loan Program Technical Handbook
The anticipated amount of income, and likelihood of its continuance, must be established to determine the applicant’s capacity to repay the loan. The determination of stable and dependable income remains the lender’s responsibility. GUS does not evaluate the stability and dependability of repayment income in the overall risk evaluation. The lender must determine the history and stability of earnings prior to entering repayment income into GUS. Repayment income often differs from the annual income and adjusted income calculations that determine program eligibility.
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Calculation of Monthly Repayment Income – Base Earnings | |
Frequency | Calculation of Repayment Income |
Hourly | Multiply the hourly pay rate by the average number of hours worked per week; multiply by 52 weeks; divide by 12 months. |
Weekly | Multiply the weekly income by 52 weeks; divide by 12 months. |
Every two weeks | Multiply the two weeks income by 26 pay periods; divide by 12 months. |
Twice per month | Multiply the semi-monthly income by 24 pay periods; divide by 12 months. |
Monthly | Use the monthly income from the paystub. Multiply by 12 months. |
Applicants who are paid less than 12 months per year | Annual salaries may be received over a time period of less than 12 months. Determine how often; how long the applicant is paid. Utilize the monthly income based upon calculations above. Example - divide an annual salary paid 10 months of the year by 12 to arrive at the average monthly income. |
Additional Income: Procedures for treating other acceptable income sources in addition to primary employment are described below. The lender must determine that the amount of additional income used to qualify the applicant is likely to continue at the level used for loan qualifying. The monthly income documented in the mortgage file must support the lender’s income calculation. A written analysis of the additional income used to qualify the applicant must be retained in the lender’s mortgage file.
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Only actual income derived from assets of parties to the note should be considered when computing repayment income. Additional Resource: https://www.rd.usda.gov/files/hb-1-3555.pdf#page=155