Will an underwriter deny my USDA loan for this? Or would a letter of explanation suffice?
You might be looking for the wrong thing if you are looking for a 2020 transcript. No one has filed a 2020 tax return. The last tax returns filed were 2019 returns ---which were filed in 2020. Look for a 2019 transcript.
You will have to ask the lender what they will accept.
If you mailed an amended return for 2019 or earlier the IRS probably has not processed it yet.
In normal times it takes up to 16 weeks or more to process an Amended 1040X return. But these are not normal times.
Sorry the IRS has limited staff due to Covid-19. They just started opening the mail in June that's been stacking up. Back in March the IRS closed their processing centers and stopped processing mailed tax returns. An IRS spokesperson said that they have about 11 million pieces of unopened mail. The IRS says....."We’re experiencing delays in processing paper tax returns due to limited staffing. If you already filed a paper return, we will process it in the order we received it." So it may take longer if you mailed in June or later. So you have to keep waiting.
See this IRS page for the latest information
Unfortunately, if you made the mistake of doing a "non-filer" form to get the stimulus faster, then your regular return is treated as an amended return, and amended returns take 16+ weeks to process under normal circumstance. No idea how long they will take this year with the shut downs. Then, it may not show up as a transcript until a few weeks after it is processed.
To get an idea of when the return might be processed, you can check here.
The underwriter may be understanding, or they may be required to follow their policies to the letter and deny a loan. We can't say, you will have to ask the underwriter. (Who is not the person who is taking your application, that is a lower level person with zero authority.)
to satisfy your bank print the revised correct tax return, leave out the 1040-X form.
Sign the 1040 and fax or mail it , or hand carry it to your loan process officer at the bank.
For my loan just the two pages of Form 1040 was sufficient.