USDA Rural Housing Loan

USDA Rural Housing loans provide individuals and families with affordable financing for those who have little savings. This blog provides updates on USDA, local trends, and a quick way to apply online for this fantastic loan program. GBC lends to all 50 states!

USDA Loan Requirements

USDA Loan Requirements

The USDA home loan is a fantastic way to purchase a home with no money down.  This loan program is insured by the United States Department of Agriculture.  The rural loan is quickly becoming the most popular home loan in 2010 now that FHA has begun to increase their requirements such as credit score, down payment, mortgage insurance, and qualifying ratios.

In order to qualify for the USDA rural housing loan, a borrower must meet the following USDA loan requirements.

Income Eligibility:

  • Total Household Income - There are two tiers (income ranges from on average from 70K to 110K per year)
    1. Household of 1-4 will equal the current 4 person limit for the property's county.
    2. Household of 5-8 will equal the current 8+ person limit for the property's county.

Property Eligibility:

  • The property must be located in an approved area designated by the USDA.  Eligibility for counties, cities, and towns are determined by population.  Originally, the USDA loan program was created for farmers.  Today, it is open to all residential properties that are deemed rural property by the USDA.  Most metro areas do not qualify but approximately 80% of the nation does qualify.
  • New or proposed home construction:  Must meet FHA appraisal standards
  • Manufactured Homes:  Only allowed if the manufactured home is brand new, double wide, and purchased from an Agency approved dealer.
  • Modular Home:  No restrictions
  • Condo and Town Home:  Must meet the requirements of Fannie Mae, Freddie Mac, or FHA.

Credit Scores:

  • 620 minimum middle credit score (scores are likely to increase to 640-660 soon)
  • Must have at least 2 credit scores

Other Requirements:

  • Must be a primary residence
  • May not have other financed properties
  • Co-signors not allowed if the co-signor will not be living the subject property
  • No non-essential buildings and land.  The property must be considered residential
  • Housing ratios and debt-to-income rations:  31/43 

Check out USDA loan eligibility for exact income figures and property maps for your area!

Justin Messer | Active Rain Confirmed Loan Officer | SEO Trainer
Apply Now - My Outside Blog - ActiveRain - USDA Loans

Search for homes in your area by entering your city and state into the search bar from my blog page or profile page.

 

1 comment • Justin Messer USDA Rural Housing Loan • March 04 2010 09:59AM

2010 changes to FHA

FHA, the Federal Housing Administration, has announce many changes for 2010.  The FHA wants to lower its market share in residential mortgages throughout the United States.  They are currently insuring around 40% of mortgages throughout the nation.  In an attempt to lower market share, they are increasing their UFMIP from 1.75% to 2.25% on all FHA loans.  A little over a year ago, this amount was only at 1.5%.  Most of the 2010 changes to FHA will not take place until April.  Althought these 2010 changes to FHA are positive, it will also slow any recovery to boost the housing market.  Odds are, they will only last for a couple of years.  For more information on other loan products, visit Justin Messer at GBCmortgage.com.

Via Sabrina Linman (Prime Lending):

The rumors are true and I am excited! FHA has handed down the changes...

 

FHA had talked about increasing down payment to 5% rather than 3.5%

  • Increased Enforcement- HUGE WIN!  Let's get the lenders that are not playing by the rules out of here- - the one's doing it right!
  • MIP changes- not as big as you think- the analysis on monthly payment isn't a big hit
  • We all have to follow the same rules, so no one has a leg up!
  • 3% vs. 6% seller concession- talk to your borrowers about gifts! 

   Credit and Credit Scores

  • New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA's 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%. (PrimeLending requires a 620 credit score for all transactions)
  • This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well.
  • This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.

Reduce allowable seller concessions from 6% to 3%  

  • The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions.
  • This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.

Increase enforcement on FHA lenders  

  • Publicly report lender performance rankings to complement currently available Neighborhood Watch data - Will be available on the HUD website on February 1.  
  • This is an operational change to make information more user-friendly and hold lenders more accountable; it does not require new regulatory action as Neighborhood Watch data is currently publicly available. Enhance monitoring of lender performance and compliance with FHA guidelines and standards.  
  • Implement Credit Watch termination through lender underwriting ID in addition to originating ID.
  • This change is included in a Mortgagee Letter to be released tomorrow, January 21st, and is effective immediately.
  • Implement statutory authority through regulation of section 256 of the National Housing Act to enforce indemnification provisions for lenders using delegated insuring process Specifications of this change will be posted in March, and after a notice and comment period, would go into effect in early summer.
  • HUD is pursuing legislative authority to increase enforcement on FHA lenders. Specific authority includes:  
  • Amendment of section 256 of the National Housing Act to apply indemnification provisions to all Direct Endorsement lenders. This would require all approved mortgagees to assume liability for all of the loans that they originate and underwrite
  • Legislative authority permitting HUD maximum flexibility to establish separate "areas" for purposes of review and termination under the Credit Watch initiative. This would provide authority to withdraw originating and underwriting approval for a lender nationwide on the basis of the performance of its regional branches

In addition to the changes proposed today, the FHA is continuing to review its overall response to housing market conditions, and continuing to evaluate its mortgage insurance underwriting standards and its measures to help distressed and underwater borrowers through FHA/HAMP and other FHA initiatives going forward.

These changes are a positive move for our industray. Industry leaders will embrace them and continue to help more people achieve their dreams of home ownership!

Justin Messer | Active Rain Confirmed Loan Officer | SEO Trainer
Apply Now - My Outside Blog - ActiveRain - USDA Loans

Search for homes in your area by entering your city and state into the search bar from my blog page or profile page.

 

1 comment • Justin Messer USDA Rural Housing Loan • January 22 2010 04:40PM

USDA Rural Housing Loans are running out of money! Now what?

USDA Rural Housing Loans are running out of money!  Now what?

  The President has signed the Agriculture Appropriations Act for fiscal year (FY) 2010.  Since October 1, 2009 we have operated under a Continuing Resolution (CR) with carryover funds from FY 2009 and funds allocated under the CR.  Once the bill is signed into law a lapse of three to four weeks occurs before program levels receive funds under the bill from the Office of Management and Budget (OMB).
 
Due to a high demand for purchase funds, it is anticipated CR and FY 2009 carryover funds for PURCHASE transactions will be exhausted by October 27, 2009, if not sooner.  Refinance funds under the CR and carryover from FY 2009 remain available.  During the lapse of funding for purchase transactions, Rural Development will continue to process and issue Conditional Commitments “Subject to receipt of Congressionally appropriated funds.”   Business will be conducted as usual.

As you can see from the following, USDA Rural Housing is currently using carryover funds from 2009 and expect to have all of those exhausted by next Wednesday, October 27.  There will be lenders who will not be able to close and fund USDA Rural Housing mortgages for a few weeks.

NORTHSTAR MORTGAGE GROUP IS NOT ONE OF THOSE LENDERS!  I want to make sure that you understand that we will still be able to close and fund mortgages for purchases under the USDA Rural Housing Program even when they are issuing conditional commitments and waiting for the funds to be released.  This is huge due to the timing with the expiration of the First Time Home Buyer’s Credit!

If you have a client that is doing a USDA Rural Housing mortgage and closing in November, make SURE you ask the lender TODAY if they can fund with a conditional commitment while USDA is securing the 2010 funds; if not, you need to have your client move their mortgage so that they do not lose the opportunity to receive the first time home buyer’s credit, as it expires on November 30 and with the Thanksgiving holiday right there at the end, they should be closed on or before November 23 to make sure that they get it!



I hope that you remember us if your clients’ current lender is unable to do their mortgage!
Visit the USDA Loan Expert website to get started!

Justin Messer | Active Rain Confirmed Loan Officer | SEO Trainer
Apply Now - My Outside Blog - ActiveRain - USDA Loans

Search for homes in your area by entering your city and state into the search bar from my blog page or profile page.

 

1 comment • Justin Messer USDA Rural Housing Loan • October 22 2009 04:25PM