source:
  type: guide
  id: usda-hb-3555-8.2
  authority: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶8.2 —
    Applicant Eligibility Requirements
  description: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶8.2
    — Applicant Eligibility Requirements.
  coverage_tier: operative
obligations:
- id: usda-hb-3555-8.2-full
  canonical_id: usda-hb-3555-8.2-full
  section: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶8.2 — Applicant
    Eligibility Requirements
  type: do
  tags:
  - regulator-direct
  - usda
  - usda-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶8.2
      — Applicant Eligibility Requirements
    source_class: usda-handbook
    source_url: https://www.rd.usda.gov/sites/default/files/hb-1-3555_consolidated.pdf
    snapshot_id: 0466acd1ea2d17a4
    fetched_at: '2026-05-25T14:10:13Z'
    content_hash: sha256:22ac6f998ff72578e318fca138ebe80fb18ae2fc701eb5936172f1842679a13a
    paragraph_quote: '8.2 APPLICANT ELIGIBILITY REQUIREMENTS The lender must confirm
      the applicants meet the criteria for obtaining a SFHGLP guarantee prior to full
      analysis of the applicants’ loan request. A. Owning a Dwelling [7 CFR 3555.151
      (e)] Applicants who own an additional dwelling to which they will retain ownership
      may be eligible for a guaranteed loan. It is not the intent of the SFHGLP to
      assist applicants in building an investment portfolio. The loan applicants are
      limited to owning one single family housing unit, other than the house associated
      with the loan request. Applicants may purchase another home if all the criteria
      below are met: x The applicants are not financially responsible for another
      Agency guaranteed or direct home loan by the time the guaranteed home loan is
      closed; x The applicants are financially qualified to own more than one house;
      x The applicants will occupy the home financed with the guaranteed loan as their
      primary residence throughout the term of the loan; and x The current home owned,
      whether adequate or inadequate, no longer meets the applicants’ needs. Examples
      include, but are not limited to: o Relocation due to a new job opportunity.
      o Requires a larger home to provide for a growing family. o Obtaining a divorce
      and the ex-spouse will retain the dwelling. HB-1-3555 (03-09-16) SPECIAL PN
      8-2 Revised (08-05-25) PN 649 Guidance documents lack the force and effect of
      law, unless expressly authorized by statute or incorporated into a contract.
      USDA may not cite, use, or rely on any guidance that is not available through
      their guidance portal, except to establish historical facts. o Is a non-occupying
      co-owner or co-borrower on another mortgage loan and wants to purchase their
      own dwelling. All documentation will be retained in the lender’s permanent loan
      file and may be requested by the Agency upon review. Repayment Income for rents
      received less than 24 months. Applicants retaining their existing dwelling must
      qualify for all mortgage liability payments. Rents received less than 24 months
      do not represent a stable continued source of income for repayment income and
      cannot be used when qualifying the loan request. The corresponding mortgage
      liability associated with the retained dwelling must be included in the debt
      ratio calculation. Refer to Chapter 9 for additional guidance on rental income.
      Repayment Income for rents received 24 months or more. When applicants can demonstrate
      rental income is stable and dependable, as evidenced and documented with the
      most recent two years tax returns and a copy of the current written lease executed
      by the homeowner and the lessee, the net rental income can be considered for
      repayment ratios. IRS Form 1040 Schedule E is required to verify all rental
      income. Depreciation or depletion shown on Schedule E may be added back to the
      net income or loss for repayment income. Positive rental income is considered
      gross income for repayment income. Negative rental income must be treated as
      a recurring liability and included in the debt ratio calculation. Refer to Chapter
      9 for additional guidance on rental income. Annual Income Calculation. Any positive
      net rental income will be included in the calculation of annual income to determine
      eligibility of the household for the SFHGLP. Rental income must be considered
      in the annual income analysis regardless of its duration. Rental income, for
      annual income purposes, is considered the total rental real estate income amount
      reported on the most recent IRS Form 1040 Schedule E for the previous 12 months.
      In the absence of a Schedule E; canceled checks, money order receipts, bank
      statements, or other documentation may be used to support the amount of rents
      received for annual income purposes. Any negative net rental income is treated
      as zero for the purposes of calculating annual income. Documentation. Refer
      to Chapter 9 for additional guidance on documentation requirements of rental
      income. Guidance on the process of entering rental income into the Guaranteed
      Underwriting System (GUS) is available at: https://www.rd.usda.gov/resources/usda-linc-training-resource-library,
      select GUS, Training, Real Estate Page. HB-1-3555 (03-09-16) SPECIAL PN 8-3
      Revised (08-05-25) PN 649 Guidance documents lack the force and effect of law,
      unless expressly authorized by statute or incorporated into a contract. USDA
      may not cite, use, or rely on any guidance that is not available through their
      guidance portal, except to establish historical facts. B. Obtaining Credit [7
      CFR 3555.151 (j)] Form RD 3555-21, Request for Single Family Housing Loan Guarantee,
      requires both the lender and the applicants to certify that the applicants are
      unable to secure credit from other sources upon terms and conditions which the
      applicants can reasonably fulfill. The certification can be made if the applicants
      will not meet the requirements to obtain a traditional conventional credit loan
      at loan closing. Traditional conventional credit is defined for Agency purposes
      as: x The applicants have available personal non-retirement liquid verifiable
      asset funds of at least 20% of the purchase price that can be used as a down
      payment; x The applicants can, in addition to the 20% down payment, pay all
      their closing costs associated with the loan; x The applicants can meet qualifying
      ratios of no more than 28% PITI and 36% TD when applying the 20% down payment;
      and x The applicants can demonstrate qualifying credit for such a loan. The
      conventional mortgage loan term is for a 30- year fixed rate loan term without
      a condition to obtain private mortgage insurance (PMI). If the applicants meet
      the cumulative criteria of traditional conventional credit, as defined by the
      Agency above; the applicants are ineligible for the SFHGLP. It remains the underwriter’s
      responsibility to support the criteria of this Section. However, when the criteria
      identified in the first three bullet points above are met, documentation to
      support ineligibility for conventional credit should be submitted to the Agency
      as part of the complete loan application. In all cases, the lender will retain
      the documentation to support the applicants’ ineligibility for conventional
      credit in their permanent loan file. Liquid assets for conventional credit down
      payment purposes typically consist of cash or cash equivalents. Cash or cash
      equivalents include funds in the applicants’ checking or savings accounts, sale
      proceeds from a real estate owned property, or investments in stocks, bonds,
      mutual funds, certificates of deposit, and money market funds, unless they are
      encumbered (pledged as collateral) or otherwise inaccessible without substantial
      penalty. Cash equivalents do not include funds in Individual Retirement Accounts,
      401(k) accounts, Keogh accounts, or other retirement accounts that are restricted
      and may not be accessed without incurring substantial monetary penalties. Educational
      college savings HB-1-3555 (03-09-16) SPECIAL PN 8-4 Revised (08-05-25) PN 649
      Guidance documents lack the force and effect of law, unless expressly authorized
      by statute or incorporated into a contract. USDA may not cite, use, or rely
      on any guidance that is not available through their guidance portal, except
      to establish historical facts. plans, such as a 529 plan, which incur a penalty
      to withdraw, are not considered a cash equivalent. Owning land is not considered
      a liquid asset. If the applicants have ownership in a business, or are self-employed,
      the lender should closely review the asset accounts to verify assets are not
      transferred between a personal account and a business account and vice versa.
      These accounts should function as two separate financial tools, one for personal
      transactions and one for business transactions. In the event the assets from
      the business account and personal account are co-mingled, the co-mingled assets
      would need to be included in the test for obtaining credit. C. Occupying the
      Property [7 CFR 3555.151(c)] Applicants must agree to personally occupy the
      dwelling as a principal residence throughout the term of the loan. Bona fide
      occupancy in the home as the applicants’ principal residence within 60 days
      after signing the security instruments is required. x Active duty military applicants.
      Active duty military applicants may be eligible for the SFHGLP. They must occupy
      the property as their principal residence. The military applicants must express
      intent to meet occupancy requirements upon his/her discharge from the service.
      A military service member who cannot physically reside in a property because
      they are on active duty will be considered to meet occupancy requirements defined
      in §3555.10 of 7 CFR 3555 if: o The service member’s family will continue to
      occupy the property as their principal residence. Refer to Attachment 9-A, for
      additional guidance on calculating military income for repayment of the loan
      request. x Student applicants. Due to the probability of relocation after graduation,
      full- time students cannot obtain loans unless they intend to make the home
      a permanent residence and there are reasonable prospects of securing employment
      in the area after graduation. D. Having Legal Capacity [7 CFR 3555.151(f)] Applicants
      must be considered an adult under State law and must have the legal capacity
      to incur the loan obligation. Applicants with a court-appointed guardian or
      conservator, empowered to obligate the applicant in real estate matters, are
      eligible for a loan. Applicants must be an individual, not a trust, corporation,
      or partnership. HB-1-3555 (03-09-16) SPECIAL PN 8-5 Revised (08-05-25) PN 649
      Guidance documents lack the force and effect of law, unless expressly authorized
      by statute or incorporated into a contract. USDA may not cite, use, or rely
      on any guidance that is not available through their guidance portal, except
      to establish historical facts. E. Not Having a Suspension or Debarment [7 CFR
      3555.151(g)] Individuals who have been suspended or debarred from participation
      in Federal programs are not eligible for a guaranteed loan. Applicants that
      have been excluded from a non-housing federal program continue to be eligible
      to participate in the SFHGLP, unless the individual becomes suspended or debarred
      pursuant to 2 CFR Part 180 and 417. Applicants that are excluded from federal
      housing programs or excluded from all federal programs are ineligible to participate
      in SFHGLP. The approved lender, or their agent, is responsible for screening
      the applicants and all others who are parties to the transaction such as: x
      Loan Officer x Surveyor x Loan Processor x Builder x Underwriter x Title Company
      x Appraiser x Closing Agent on the U.S. General Services Administration’s (GSA)
      System for Award Management at https://sam.gov/content/exclusions as part of
      their eligibility determination of applicants. The lender must use due diligence
      in determining if the applicants are suspended or debarred and eligible for
      the program. Lenders must retain documentation in their permanent loan file
      to support their decision. The above list is not all inclusive as the lender
      is responsible for determining all parties involved in the transaction. Lenders
      who utilize an automated method that creates a report, similar to a watch list,
      which performs a check of the SAM website, will meet the criteria of this check.
      The results of the SAM check including date and screen print will be retained
      in the lender’s permanent loan file. The SAM check should occur prior to the
      request for Conditional Commitment and no greater than 30 days prior to loan
      closing; otherwise, the lender will update their documentation by performing
      another check of SAM. Rural Development staff is not required to rescreen applicants
      upon request of a loan guarantee. During submission of the application, the
      lender will verify a SAM check was performed by documenting the date in GUS.
      For loan types not supported by GUS (manually submitted) the lender will provide
      the date the SAM check was completed and identify if the party to the transaction
      is debarred when submitting the file to Rural Development for issuance of a
      Conditional Commitment. Additional guidance on this process can be located following
      Step 3, “E-mail the Appropriate Production Team” of the Manual Submission Job
      Aid, located at https://www.rd.usda.gov/resources/usda-linc-training- resource-library,
      in the “Loan Origination” tab, “Documents and Resources”, “Manual Submission
      Job Aid”. HB-1-3555 (03-09-16) SPECIAL PN 8-6 Revised (08-05-25) PN 649 Guidance
      documents lack the force and effect of law, unless expressly authorized by statute
      or incorporated into a contract. USDA may not cite, use, or rely on any guidance
      that is not available through their guidance portal, except to establish historical
      facts. F. Having Acceptable Citizenship or Immigration Status [7 CFR 3555.151
      (b)] The applicants must be a U.S. citizen, a U.S. non-citizen national, or
      a qualified alien as identified in Section 401 of the Personal Responsibility
      and Work Opportunity Reconciliation Act of 1996 (PRWORA) (8 U.S.C. Section 1611).
      Lenders must secure and retain acceptable documentation to determine whether
      the applicants for a guaranteed loan are U.S. citizens, U.S. non- citizen nationals,
      or “qualified aliens.” In all cases, non- U.S. citizens legally admitted into
      the United States will have a United States Citizenship and Immigration Services
      (USCIS) number. In the rare occasion where a number is not available or known,
      the applicants should contact the USCIS. For all file submissions, the lender
      is responsible for documenting the applicants’ legal residency. The lender is
      responsible to collect any necessary documents needed to validate eligibility.
      By submitting the request for a Conditional Commitment to the Agency, the lender
      represents and warrants that the non-U.S. citizen applicant is legally present
      in the United States and meets the eligibility requirements of the SFHGLP. This
      program is available to individuals who receive a loan note guarantee under
      the SFHGLP who: 1. Reside as a citizen in any of the 50 States, the Commonwealth
      of Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, the Commonwealth
      of the Northern Marianas, Federated States of Micronesia, and the Republics
      of the Marshall Islands and Palau; or, 2. A non-citizen national who resides
      in one of the foregoing areas after being legally admitted to the U.S. for permanent
      residence or on indefinite parole. The term “indefinite parole” is no longer
      a term used by the Citizenship and Immigration Service (CIS), formerly the Immigration
      and Naturalization Service (INS). Generally, a U.S. non-citizen national is
      a person born in American Samoa or Swains Island or after the date the U.S.
      acquired American Samoa or Swains Island, or a person whose parents are U.S.
      non-citizen nationals. Typical evidence of the relatively uncommon status as
      a non-citizen national includes a birth certificate or passport. Persons who
      are non-citizen nationals are eligible for consideration. Aliens must provide
      acceptable evidence that they are qualified aliens. A qualified alien is defined
      under PRWORA (8 U.S.C. Section 1641) as: x An alien who is lawfully admitted
      for permanent residence under the Immigration and Nationality Act (INA); or
      x An alien who is granted asylum under section 208 of such Act; or HB-1-3555
      (03-09-16) SPECIAL PN 8-7 Revised (08-05-25) PN 649 Guidance documents lack
      the force and effect of law, unless expressly authorized by statute or incorporated
      into a contract. USDA may not cite, use, or rely on any guidance that is not
      available through their guidance portal, except to establish historical facts.
      x A refugee who is admitted to the United States under section 207 of such Act;
      or x An alien who is paroled into the United States under section 212(d)(5)
      of such Act for a period of at least 1 year; or x An alien whose deportation
      is being withheld under sections 243(h) or 241(b)(3) of such Act, as amended;
      or x An alien who is granted conditional entry pursuant to section 203(a)(7)
      of such Act as in effect prior to April 1, 1980; or x An alien who is a Cuban/Haitian
      Entrant as defined by section 501(e) of the Refugee Education Assistance Act
      of 1980; or x An alien who has been battered or subjected to extreme cruelty
      under section 431 of the Immigration and Nationality Act. In addition to the
      categories of qualified aliens described above, Native Americans born in Canada
      may also be eligible as lawfully admitted for permanent residence. The documentation
      described above may be unavailable. To establish the applicants are qualified
      aliens, the Native American should provide all of the following documentation:
      x A letter from their Native American tribe stating that the alien has at least
      50 percent Native American or Aboriginal blood (also referred to as the blood
      quantum); x Their Canadian “Certificate of Indian Status Card” with a red stripe
      along the top; x Their birth certificate; x If a Haudenosaunee, their Red I.D.
      Card; x If an Inuit, an Inuit enrollment card from one of the regional Inuit
      lands claim agreements; x Their social security card issued by the U.S. Social
      Security Administration; and x Their Canadian or United States driver’s license.'
  judgment: false
