source:
  type: guide
  id: usda-hb-3555-9.7
  authority: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶9.7 —
    Overview
  description: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶9.7
    — Overview.
  coverage_tier: operative
obligations:
- id: usda-hb-3555-9.7-full
  canonical_id: usda-hb-3555-9.7-full
  section: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶9.7 — Overview
  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 ¶9.7
      — Overview
    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: '9.7 OVERVIEW Repayment income will determine if applicants have
      sufficient income to repay the mortgage in addition to recurring debts. Repayment
      income calculations often differ from the calculation of annual and adjusted
      annual income. Repayment income is the stable and dependable income of the applicants
      who will be parties to the note. Co-signers and non-occupant co-borrowers are
      not permitted for a guaranteed loan transaction. HB-1-3555 (03-09-16) SPECIAL
      PN 9-11 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. 9.8 STABLE AND
      DEPENDABLE INCOME [7 CFR 3555.152(a)] 7 CFR 3555.152(a) and Attachment 9-A assist
      lenders in reviewing income types. The following guidance also assists lenders
      to consider repayment income sources: x The income source must be documented.
      x There must be evidence to support the historical receipt of earnings. x Establish
      the likelihood of its continuance for at least 3 years into the mortgage. x
      Analyze any gaps in employment to make a final determination of stable and dependable
      income. The Agency does not impose specific criteria regarding when a gap in
      employment is acceptable. It is the approved lender’s responsibility to analyze
      the complete employment history to determine stable and dependable income. x
      Caution should be utilized for applicants that have documented declining wages
      or earnings. Lenders must ensure repayment income is not inflated/overstated.
      x Caution should be utilized for applicants that have a documented sharp increase
      in earnings. A sharp increase in earnings is defined as a 20 percent or greater
      variance in income from the previous 12 months. Lenders must determine if an
      increase is supported and logical. Examples include, but are not limited to,
      a promotion with the current employer, documented pay raise, income trend analysis
      for overtime, bonus, commission, seasonal employees, etc. x Caution should be
      utilized for applicants that have a documented decrease in earnings. A documented
      decrease in earnings is defined as a 20 percent or greater variance in income
      from the previous 12 months. Lenders must determine if the decrease has/will
      continue or if there is evidence to support the earnings have stabilized. Examples
      include, but are not limited to, loss of job but new employment secured with
      lower wages, new profession/line of work, loss of contract/clients, economic
      cycle impact such as real estate, finance/lending, manufacturing, construction,
      etc. HB-1-3555 (03-09-16) SPECIAL PN 9-12 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 Lenders may gross up income that is not subject to Federal taxes 25
      percent. x Any loss incurred by a self-employed business (full time or part-time)
      that is closed may be removed from consideration when the applicants provide
      a letter of explanation and documentation to the lender which details: 1. When
      the business was closed; 2. Why the business was closed; 3. How the business
      was closed; and 4. Evidence, satisfactory to the lender, to support the closure
      of the business. REMINDER: Approved lenders are responsible for their underwriting
      decisions, which includes the determination of stable and dependable income.
      Loans that default within 60 months of the date the Loan Note Guarantee is issued
      may result in indemnification from the approved lender to USDA due to unauthorized
      underwriting per 7 CFR 3555, HB-1-3555, and additional published USDA guidance.'
  judgment: false
