True or False: It is common for annual and repayment income calculations to differ.

The statement is accurate because it is common for annual and repayment income calculations to differ due to the methods used in their calculations. Annual income generally represents a broader scope of income and is often based on historical earnings over the past year, which can include salaries, bonuses, overtime, and additional income sources such as alimony or social security. This figure is used to assess overall financial stability and potential for loan servicing.

Repayment income, on the other hand, specifically refers to the income that can be considered as qualifying income for the purpose of loan repayment. This calculation can include only stable and regular income sources that are likely to continue, such as base salary without considering fluctuating components like overtime or one-time bonuses. Therefore, if a borrower has variable income or income from unusual sources, it might not be included in the repayment income calculation, which can lead to discrepancies between the two figures.

This difference is crucial because it helps lenders evaluate the applicant's capacity to repay the loan, ensuring that only reliable and consistent income sources are counted when determining eligibility. Thus, recognizing the distinction between these calculations is important in the context of USDA Rural Housing Loans and overall lending practices.