USDA Income limits

[Anonymous]

We’re currently pre approved for a USDA loan. The income limits for the area we are moving are 95k. Last year I made 85k including bonuses and overtime. This year in June I took a promotion but with a pay cut. My new base is 65k salary unlike last year which was hourly. So I lose my overtime pay and my monthly bonuses now go to a quarterly basis. So far this year I’ve made 56k. My lender thinks we might exceed the income limits but after doing some math it looks like I’ll finish this year at 80k without bonuses, with bonuses I’ll finish at 86k. My bonuses are not guaranteed and depend on performance. Overall should we be worried of not qualifying for USDA income restrictions? Also is there any steps we can take to prove that we meet the income requirements? Thanks in advance.

[pgtackle2003]

So if the income limit is 95k and you should bring home max 80k, why does the lender think this is a problem?  I believe USDA will take the AGI for the last 2 years and use the average for income. Seems you are far under the 95k so not sure why they would think this is an issue.

[Anonymous]

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I'm also monitoring DW and I's income each week as hard as I can to avoid the income limits. Here in GA it's only $86,850 and we;re going to come to about $84k so it's right up there.

The lender that I have been conversing with told me that they'll look at your average AGI over the last 2 years, and then also your last 30 days of stubs and make a decision from that. I don't see why your lender is thinking you'll have an issue.

[homeloanexpert]

I have been funding RDL's for several years. Based on your scenario, you do not exceed the USDA max income limits (based on your researched income limits). First, please know that the USDA calculates income differently that lenders. But in your case you have what we consider declining income so your base will not be averaged over the last 2 years. You are on salary, and it is what it is. So this case, the USDA and the lender will have the same income calculations. As far as bonuses are concerned, if you will continue to received them,  they will be averaged over a 24 month period. Your income scenario is simple and I am not sure why any experienced LO would think you may exceed the limits. Sleep like a baby, you are good to go!

Best wishes to you

[Anonymous]

Care to alaborate on how USDA treats income versus lenders? This would help others (including me) to know.

[VALoanMaster]

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@Anonymous wrote:

Care to alaborate on how USDA treats income versus lenders? This would help others (including me) to know.

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There are 2 different calculations when it comes to RD loans.

1) The way RD calculates the income to determine whether or not you qualify under the county income limits.

2) The way a lender calculates your income to determine your ability to repay the loan.

[Anonymous]

I was under the (clearly mistaken) impression that they would determine if you are under the county limits simply by taking your current earning YTD, divide by the number of weeks already elapsed in the year, and then multiple by 52.

Not the case?