Which of the following must be established before approving repayment income?

To ensure that a borrower has the capacity to repay a USDA Rural Housing Loan, it is essential to establish the stability of their income source and its continuity for a minimum of three years. This is critical because lenders need to assess whether the borrower has a reliable and ongoing income stream that can support regular mortgage payments. If an income source is unstable or has not been consistently received for that length of time, it poses a higher risk for default, making the loan less appealing to lenders.

Stability refers not only to the amount of income but also to the nature of the employment or sources of income, such as wages, self-employment earnings, or other consistent financial resources. By reviewing the income history over this three-year period, lenders can evaluate whether the borrower is likely to maintain the same level of income in the future.

This informs lending decisions and helps establish a more accurate picture of the borrower's financial health, which is crucial for responsible lending practices.