Can nontaxable income help increase your USDA qualifying budget?

Can nontaxable income help increase your USDA qualifying budget?. Mortgage pre-qualification vs. pre-approval

Can nontaxable income help increase your USDA qualifying budget? video duration 2 Minute(s) 43 Second(s), published by Metroplex Mortgage Services on 19 07 2019 - 18:42:52.

https://www.usdaloanpro.com/blog/2019/07/19/can-nontaxable-income-help-increase-your-usda-qualifying-budget/ Can nontaxable income help increase your This is the first video in a 4 part series where Erin discusses the impact of student loan debt on mortgage qualification
Upcoming videos will cover the impact of .

Mortgage Questions . A brief comparison of mortgage pre-qualification and pre-approval.

https://www.usdaloanpro.com/blog/2019/07/19/can-nontaxable-income-help-increase-your-usda-qualifying-budget/

Can nontaxable income help increase your USDA qualifying budget?

How can nontaxable income be increased to help you qualify for a USDA loan?

How does tax free or tax exempt income help you qualify for a USDA loan?

In today’s video I am going to share with you the details and explain how nontaxable income can be used to help increase your USDA qualifying ability.

Now, before we get started, don’t forget to take advantage and download our USDA Blueprint for Success with the link below.

This free guide is designed to walk you through the process step-by-step and is a great tool for both homebuyers and Realtors alike.

As a starting point, where an individual receives income that is tax exempt, this can provide increased flexibility towards USDA loan qualifying, but let’s first understand the difference between taxable and nontaxable sources of income:

Taxable Income

Common examples of taxable income would be:
• Wages, Salaries, & Commissions;
• Self-employment income;
• Unemployment compensation; and
• Rental Income.

Nontaxable Income

On the other hand, here are examples of nontaxable income:
• Child Support;
• VA Disability Benefits;
• Worker’s compensation; and
• Social Security benefits may also be entirely tax-free depending on your income.

For more information on the differences between taxable and nontaxable income, please visit IRS Publication 525.

What does “grossing up” income mean?

USDA Guidelines state the following:
“If the income is tax exempt, it may be grossed up 25 percent. No other adjustments are authorized.”

Your USDA qualifying ability will be determined in part by calculating your gross monthly income before taxes, which may appear to put those who receive tax exempt income at a disadvantage, but because guidelines permit the “gross up” of nontaxable income, this has the effect of creating a before tax or gross income figure.

Now, don’t think this is more complicated than it sounds. Let’s take a look at a quick example:

If someone receives $500 in child support that is not taxable, after grossing it up, we can use $625 towards their USDA loan qualifying.
In summary, understanding the different sources of income and how they can help your USDA loan qualification is critical to success!

http://www.USDALoanPro.com
Download our FREE USDA Blueprint for Success! http://www.usdaloanpro.com/blue-print-for-success/

GET MORE INSIGHTS

More ProTips from USDA Loan Pro:

Subscribe on YouTube:
http://www.youtube.com/subscription_center?add_user=MetroplexMortgage

Website:
http://www.usdaloanpro.com

Facebook:
https://www.facebook.com/MetroplexMortgage

Twitter:
https://twitter.com/USDALoanPro