Every year, the USDA Rural Housing Loan program is re-funded through a budgetary approval process. And every year we get notices it's about to expire or a particular lender's reserved funds have run out, but like clockwork these funds have been restored.
Given the BUDGET CUTTING PARTY on the hill --Congressional budget cuts may kill it again!
UPDATE 2/10/2011:I first reported this in August 2010. The program comes up for budget review every year. Right now our key USDA lender advises they 'have unlimited funds'. Not all lenders who do a few USDA loans reserve sufficient funds for their own needs so you need to find a dedicated USDA lender.
House bill: H.R. 5017 in 2010 saved USDA by appropriating the funds and agreeing to increase the loan guarantee fee. The increased Up Front Funding Fee of 3.5% fee makes the program self sustaining. Previously it was 2%. By the way, these loans perform!
What's so hot about USDA? No Down Payments! And the best part: the UFFF 3.5% can be funded completely in the loan, based on the APPRAISED Value. So if the home comes in valued higher than the sale price, the borrower can even fund their closing costs. The Upfront Fee may be funded or paid by the seller with NO Monthly MI. It's a lot like VA in that regard with less paperwork. Our USDA lender allows us to us a certified FHA appraiser rather than talk to the 'firewall'.
USDA Property Eligibility Search. http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
Click the Property Eligibility: Single Family Housing to search properties
Click the Income Limits: Single Family Housing: Guaranteed tab by state to find your county income limits. For example the income limit is $74,400 for an individual up to a family of four. That's a generous figure in our area. Standard 41% DTI ( like VA loans) housing expense ratio applies.
REALTORS: This is a selling point! Search homes in your area to see if your homes will qualify and ADD that the home qualifies for USDA program (just raised to 103.5% later in 2010--see comments below)
USDA also offers very generous seller contributions and folks, this is classified as a conventional loan. It's easy to close as long as the borrower truly has sufficient income and decent credit. There is a standard underwriting review for the USDA and that can hang up the timing depending on workload but seriously folks, this is a great loan program for homeowners entering the market. The buyers can't own other real estate and the home must be in a zip code that qualifies based on the housing to income ratios.
Never heard of a Rural Condo? In ares with rural laboroers condos are rural. They are so much easier to fund via USDA than FHA.
Your Support for USDA is UBER URGENT! Please, take a moment to write your congress persons and ask that they support USDA funding EVERY YEAR. http://www.congress.org Just type in your zip code (see middle of page, "Write your Leaders" and your reps senators pop up and you can email or write them on the spot.
Contact the Congressional Subcommittee on Agricultural Appropriations requesting they KEEP funding the USDA Rural Housing program. We all need to get behind this! Otherwise about July you will start having your sales go sideways...and we wouldn't want THAT now would we?
Rural homeowners and sellers will thank you. Again and AGAIN!
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