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USDA Rural Housing Loans ON THE BUDGET BLOCK!!!

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Mortgage and Lending

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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SUSAN TEMPLETON IS A LICENSED LOAN ADVISER IN WASHINGTON

NMLS# 94045

                 

 

Interest rates and products are subject to change without notice and may or may not be available at the time of loan commitment or lock-in. Borrowers must qualify at closing for all benefits. Loannetter is a private brand owned and copyrighted by Susan Templeton.

 

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Comments (27)

Gordon W. Miller
Green Mountain Real Estate - Burlington, VT

Thanks for the information. Very important program in our area.

Feb 09, 2011 03:37 PM
Susan Templeton
Bellingham, WA

Hi Mark-- Somehow this June 2010 posting caught your attention.. or is being activated again six months later (?)  Yes, USDA runs out of funds during the year and yes, Congress has hung them out to dry for months. The surprising fact is they have very low default rates like VA. Considering both are 100% programs -- go figure!

Late last year the Rural Housing Dept negotiated 'self funding' via their new higher Up Front Funding fee of 3.5% (which goes on top of the loan) so the program is now sustainable. We have a lot of clients who qulaify locally but Realtors shy away from it because a few banks they rely on don't handle them and they hear the old wives tales about how hard they are to close. In fact, USDA is underwritten to conventional guidelines and they sail through if the property and borrower are a good match. Sometimes your state desk gets bogged down so figure an extra week. A GREAT program.

 

Feb 09, 2011 04:03 PM
Susan Templeton
Bellingham, WA

Yes, Frank we did!...funny how an article resurfaces. Read above...curently funding (with a few specialist lenders) but alwasy at the mercy of Congressional budgets.

Feb 09, 2011 04:05 PM
Susan Templeton
Bellingham, WA

Joan, Linda and Green Mountain...The Rural Housing program is hard to beat. Guidelines are conservative, conventional and well insured via the funding fee. USDA is are also helpful with borrowers who may loose jobs and offer help before they get too far behind. Really worth keeping this!

Feb 09, 2011 04:07 PM
Susan Templeton
Bellingham, WA

Dave, Sorry to hear of your loss on that one!

OFTEN, it's the servicing lender that tends to mess things up, not the USDA. It's likley that the bank that held the loan had a loss share agreement with the FDIC so in fact they made more money on the foreclosure than short selling....we'll never know but we SUSPECT!

Feb 09, 2011 04:14 PM
George Bennett
Inactive - Port Orford, OR
Inactive Principal Broker, GRI

Thanks for the info. I wasn't aware that this progarm was at risk of being defunded.

Feb 09, 2011 05:31 PM
Julia Odom
Select Realty Professionals - Chattanooga, TN
Chattanooga Homes for Sale

I think you might want to add an edit at the top with an update. It's a little confusing that this has been featured now that it's more than a little out of date. Weird.

But it was great information for last year! And it's good information to have about a program that isn't always well known. =)

Feb 10, 2011 02:34 AM
Cory Barbee
San Diego, CA
Broker (760) 563-4022

Great post and information I'll talk to my business partners about...nice job !!

Feb 10, 2011 03:18 AM
Chris Olsen
Olsen Ziegler Realty - Cleveland, OH
Broker Owner Cleveland Ohio Real Estate

Hi Susan -- Rural communities are often at a disadvantage on multiple levels -- even basic phone service way back when, not it's lack of broadband, I would sure hate to see this program be reduced or terminated.

Feb 10, 2011 03:22 AM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Susan, this is a great program for people and areas that qualify. Thanks for the reminder.

Feb 10, 2011 03:42 AM
Brent Wells
The LivingWell Team - Prosper, TX
Dallas - Fort Worth

Susan,

It seems like every time we turn around they are going through another funding crisis. 

-Brent

Feb 10, 2011 04:02 AM
Chris and Berna Sloan
Group 1 Real Estate - Tooele, UT
Tooele UT

We love the program here in Utah, and have already been lobbying our legislators to get it funded! Thanks for the post!

Feb 10, 2011 04:12 AM
Susan Templeton
Bellingham, WA

HI Georga and Julia, I was surprised to see this featured...took a bit to get online and update. Thanks for your interest!

Feb 10, 2011 04:41 AM
Susan Templeton
Bellingham, WA

Hey Coach...thanks for your support!

Feb 10, 2011 04:42 AM
Susan Templeton
Bellingham, WA

Chris, Great point! I grew up in a rural area so I know what you mean. We foget we have so many advantages of good programs and good comps in cities. One of the issues is the fact many lenders 'just don' like rural'. Every application I have for a 5 acre property seems to be hit with an appraisal review. I think underwriters have visions of the Beverly Hillbillies gathered around the concrete pond!

Feb 10, 2011 04:46 AM
Susan Templeton
Bellingham, WA

Michael, Glad to remind folks about this program. It's NOT scary!

Feb 10, 2011 04:47 AM
Susan Templeton
Bellingham, WA

Hi Brent, Deb and Chris, Always great to let your legislators hear from you on matters like this that affect to your region. I doubt many congressional leaders even know what the program does...they just vote in committee on budgets everybody wants to cut. Hearing your concerns and representing citizes is after all, what they are THERE FOR! Cheers, Susan

Feb 10, 2011 04:49 AM
Kevin Kueneke
Caliber Home Loans - Encinitas, CA
San Diego Mortgage Banker

Thanks for the post Susan.  My first couple tries at USDA fell by the wayside because funding ran out and the seller's didn't want to wait until it came back.  Unfortuantely, we have limited properties in the San Diego area that actually qualify, but this is a great program.

Feb 10, 2011 05:07 AM
eRealty Houston Real Estate
Buy, or Sell Homes in Corpus Christi - Corpus Christi, TX
Brokerage
Great post, very informational. Thanks
Feb 10, 2011 01:08 PM
Susan Templeton
Bellingham, WA

For some reason I could not log in for a few days here was not able to respond to recent comments. USDA is really deserving of your consideration if you have low population areas where income is modest compared to housing costs as is typical of rural communities. Right outside my city of 68,000 these zones start. Save the zip code link to look up an address for your future listings. All the best out there!

Feb 16, 2011 04:34 AM