One of the more popular questions we get when people apply for a USDA loan is:
What kinds of income verification requirements are required for the USDA loan program?
And many people tell us that they seem reasonable. Remember – the goal of the USDA loan program is to put eligible borrowers into a great loan program.
When getting a USDA loan, the following income documentation requirements apply:
- A signed & dated IRS 4506-T completed at application and closing is required for all borrowers.
- Receipt of tax transcripts for the prior 2 years must be obtained prior to closing and compared to the borrower(s) income used in qualifying. These transcripts must be included in the loan file delivered for purchase. (Also, see “Income Verification” additional information on IRS transcripts.)
In addition, USDA allows the following as possibly eligible for alternative forms of documentation:
• If no VOE is available, applicant income may be verified by W-2 tax forms for the previous two tax years, telephone verification of the applicant’s permanent employment, and one of the following:
–paycheck stubs or payroll earnings statements covering the most recent 30-day period
–Electronic or computer-generated verification of earnings for the most recent 30-day period.
• If both the borrower and all co-borrower meet the minimum 620 credit score requirement:
–Documentation of rent payment history is not required.
–Documentation of adverse credit history waivers is not required, except for those involving a delinquent Federal debt or previous RHS loan.
–No action is necessary for any derogatory items, except for those involving a delinquent Federal debt or previous RHS loan.
From time to time income documentation requirements change, but one thing is certain — you can expect them to remain directed toward the same goal… putting qualified people into the USDA loan program.