USDA Policy Changes

USDA announced significant changes effective for Conditional Commitment requests beginning 12/15/2018. Therefore, loan packages submitted beginning 12/15/2018 must meet these new requirements. We have called out the most significant and major changes here; however, the attached documents will provide the full update of changes.


Income Adjustments & Calculations
  • Job gap: Borrower must now be back to work 12 full months. The income ending is the determining factor in the job gap.
  • 2. All income calculations are required to be documented on the Income Calculation Worksheet, which is part of a complete Form RD 3555‐


Paystub Clarification
  • Changes “paystubs that cover 30 days of earnings” to “4 weeks of earnings” for clarification.



The Requirement was suspended on December 22, 2017; however, will be reinstated effective December 15, 2018. Reinstates the requirement for 4506-Ts and tax transcripts as follows:

  • Lenders must require each adult household member as applicable to complete and sign IRS Form 4506-T for the previous two years at the time of loan application.
  • Full-time students age 18 and up that are not the applicant, co-applicant, or spouse of an applicant are not required to sign the 4506-T or have transcripts provided.
  • The 4506-T must request full transcripts with all schedules.
  • Lenders may request a Conditional Commitment without submitting the transcripts.
  • The transcript must be in the Lender loan file prior to loan closing


Living Apart: 3 Month Separation Exclusion
    A significant other, fiancé, domestic partner, or adult parent must document the required 3-month separation in order to exclude their income from the annual income calculation. Evidence to support living apart for three months may include but is not limited to an apartment lease, bills, or bank statement, in their name alone delivered to a different address, etc.


Shared Custody
  • IRS Publication 501 Guidance will not be used in determining which parent may claim their child as a household member.



The limit for assets to be considered an income source will increase from $5,000 to $50,000.

    • If the cumulative total of non‐retirement assets exceeds $50,000, lenders must perform the applicable annual income calculation


Electronic Verifications
    • USDA already accepted electronic verifications in the past, but it has now been included in the current handbook.


Balance Sheets Eliminated
    • The need for balance sheets for self-employed borrowers has been retired.


Gift Providers
  • New revisions provide guidance for gift providers. The only people that cannot provide a gift are those that stand to benefit from the sale, such as the lender, builder, real estate agent, or seller.
  •  Gifts of equity or sweat equity cannot be returned to the applicant as cash at closing. The gift of equity must be expressed as a reduction to the sales price.

Attachments include PIN 518, Chapter 9, attachment 9-A and a USDA training module explaining the changes in greater detail.


If you have any questions I can be reached at 810-223-2122.

The Importance of a Sump Pump in Your Home

Matt Keway Mortgage Lender Sump Pump

Basement water problems have been happening for as long as basements have existed! Water will leak into a basement through any opening it can, from walls, floors, and joists. Water can even seep through concrete, which lends to the notorious damp and humid basement. The first step in waterproofing your basement begins with building the structure. New construction homes have excellent designs to prevent or mitigate water damage. Even with a new home, many basements will still require a sump pump.

A sump pump system can pump out over 11,500 gallons of water when fully charged. However, a sump pump is not always a guarantee to prevent a flooded basement! Like any mechanical utility in your home, a sump pump can fail. The moving parts within the system can wear out or malfunction, or a circuit could trip leaving your machine off, or it could have become unplugged! Your basement waterproofing treatments are only good as long as your sump pump can run and keep water from rising up. Luckily, there are a few options to keep your basement dry.

The first is having an alarm on your sump pump that will sound when the pump has no power. This will alert you to a potential problem and to get power to the sump pump before a flood can happen- some alarms can even be hooked up to a home security system to send an alert straight to your phone! An important second choice is a battery backup! If the power goes out and your sump pump is out of battery, a backup will help it continue to run until power is restored. Lastly, a second sump pump is also an option for basements if there is a tendency for large amounts of water to come in.

Battery backups and secondary sump pumps are sometimes an afterthought, but they can provide assurance that your basement will be covered in an emergency and that your family won’t be stuck living in a hotel when the basement floods and you have to have the damage cleaned up. If you live in Genesee County, Michigan and are near a lake or river, your highest risk of water damage is going to be during a power outage. A battery back up, or better yet, a whole house generator for your main mechanicals (furnace, hot water heater, sump pump) can keep you comfortable, safe, and dry in a power outage or flood!