Thursday, July 24, 2014

How to calculate Income on Kentucky Rural Housing USDA Mortgage Loan

 
 
 
http://eligibility.sc.egov.usda.gov/eligibility/IncomeEligibilityHelp_SFH.jsp#4

Base Income.

 Includes a projected income anticipated for the next 12 months including full and part-time employment and seasonal work. Historical data based on the past 12 months or previous fiscal year may be used if a determination cannot be logically made.

Example: Current hourly income is $10/hour, and applicant works 40 hours/week. Monthly income would be $10*40*52=$20,800/year. The yearly income of $20,800 divided by 12 months=$1,733/month.


Overtime Income.

 Overtime income is income that is more than the base wages. Overtime for Kentucky Rural Development eligibility purposes should be verifiable and dependable. The applicant should have a history of working overtime for overtime to be considered. Typically a 12-month history of working overtime would be a good indicator that overtime will continue unless the employer indicates it will not continue. Averaging overtime over the last 12-24 months would be an acceptable method to determining projected overtime.





Bonus Income.

 Bonus income is income that is more than the base wages. Bonus income for Kentucky Rural Development eligibility purposes should be verifiable and dependable. The applicant should have a history of bonus income for it to be considered. Typically a 12-month history of receiving a bonus would be a good indicator that bonus income will continue unless the employer indicates it will not continue. Averaging bonus income over the last 12-24 months would be an acceptable method to determining projected bonus income.





Commission Income.

 Commission income is income that is more than the base wages. Commission income for Kentucky Rural Development eligibility purposes should be verifiable and dependable. The applicant should have a history of commission income for it to be considered. Typically a 12-month history of receiving a commission would be a good indicator that commission income will continue unless the employer indicates it will not continue. Averaging commission income over the last 12-24 months would be an acceptable method to determining projected commission income.





Other Income.

 Other income would include types of income such as tips, unemployment income, seasonal employment, part-time employment, National Guard, supplemental income (i.e. coaching contract), child support, alimony, social security, pensions, annuities, insurance policies, etc.

Other income needs to be verifiable and dependable.

Note: Do not include income from minors, food stamps, care of foster children, lump- sum payments, inheritances, insurance payments or other types of income that are typically not received on a routine basis.




Other Household Income.

 Eligibility for Kentucky Rural Development loans is based on all household income. In some instances, there may be income in the household from an adult family member who is not applying for the proposed loan.

The income from all adult members of the household, even though they may not be a party to the loan transaction, must be disclosed for eligibility purposes. The income needs to be verifiable and dependable. It should meet the same criteria as listed above in order to be considered. Further information concerning program eligibility and calculating income for program eligibility is available in RD Instruction 1980-D, Section 1980.347.




Self-Employment Income.

 Net income from self-employment shall be based on the previous two years Federal tax returns in addition to, if available, current years income and expenses. Self-employment income can be calculated as follows:

A two year average of the net profit (item # 31 on 1040 Schedule C or item # 36 on 1040 Schedule F) typically serves as self-employment income for loan purposes. In addition, it is permissible to add back to the net profit certain deductible items, specifically:
  • Depletion (item # 12 on Schedule C);
  • Depreciation (item # 13 on Schedule C, or item # 16 on Schedule F);
  • Interest (items #16a and #16b on Schedule C, or items # 23a and # 23b on Schedule F)




Dividends/Interest.

 Dividends and Interest income are also included in determining eligibility. This includes interest from checking and savings accounts, dividends, income received by adult members of the household from a trust fund, etc. See RD Instruction 1980-D, Section 1980.347(d)(3) for further clarification.




Net Rental Income.
 
 The net amount of income derived from rental property. This is calculated taking 75% of the gross rent from the lease agreements and subtracting the monthly payment (principal, interest, taxes, insurance). If this yields a positive number, it is included as monthly income. If it is negative, do not include as monthly income for eligibility determination. The additional 25% of the gross rent is considered as being absorbed by vacancy losses and ongoing maintenance expenses.
 

http://www.emailmeform.com/builder/form/0bfJs9b6bK8TGoc6mQk9hIu

--
Joel Lobb
Senior  Loan Officer
(NMLS#57916)


 phone: (502) 905-3708

 Fax:     (502) 327-9119

kentuckyloan@gmail.com

 Company ID #1364 | MB73346

http://mylouisvillekentuckymortgage.com/