What type of income does USDA require to be included in the annual income calculation?

The correct understanding of the USDA's annual income calculation includes potential income from liquid assets. In the context of USDA loans, liquid assets are considered because they can be readily converted to cash, reflecting a borrower's financial situation and their ability to make mortgage payments. This approach acknowledges that resources beyond standard salary or wages can contribute to a borrower's financial profile.

For example, if an individual has a significant amount in a savings account or other liquid investments, the USDA recognizes that this money could be used towards loan repayment, even if it is not regular income. This comprehensive view helps to ensure that all possible financial resources are taken into account when assessing eligibility for assistance programs.

Other types of income, such as only salary income, do not capture the full picture of an applicant's financial health, as they overlook significant assets that could aid in mortgage payments. Similarly, focusing exclusively on rental income or income from all assets would also fail to provide a complete assessment in line with USDA guidelines. The emphasis on potential income from liquid assets aligns with the USDA's goal of promoting homeownership while considering applicants' overall financial capabilities.