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USDA Update - 11/7/18

USDA has made many changes to HB-1-3555, Chapter 9: Income Analysis, effective with applications submitted to USDA for Conditional Commitment requests beginning December 15, 2018.

New Penn Financial has updated the USDA profile in regard to tax transcripts and eligible gift donors.


Tax Transcripts
Processed tax transcripts will now be required for all adult household members, except non-borrowing full time students, age 18 and up that are not a borrower, spouse of a borrower, or head of household. If the full time student is a dependent and works, include $480 of their income and take a $480 deduction as a qualified dependent when determining household income.

Processed tax transcripts for the self-employed borrowers’ business are also required.

Gift Funds
Section 7.2 Gifts has been updated to clarify that gift funds may not be contributed from any source that has an interest in the sale of the property (seller, builder, real estate agent, etc.).

Additional Chapter 9 Updates

  • Now includes examples of acceptable documentation to support that a household member has been living apart for a minimum of three months. This is applicable to significant other, fiance, domestic partner, or adult parent.
  • USDA will no longer use IRS Publication 501 for guidance in determining which parent may claim their child as a household member. The borrower is legally responsible to certify on Form RD 3555‐21 to the number of household members that will reside in their home.
  • The asset guideline for annual income consideration has been raised from $5,000 to $50,000.
  • Balance sheets are no longer a requirement for self-employed borrowers, but are up to the underwriter’s discretion to request.
  • Reformatting of the chapter, and clarification of requirements for ease of use has been completed as well.

 

Please reference the Product Profiles page for full details of the changes outlined in this announcement.