USDA Guaranteed Rural Housing is NOT just for Mississippi, but for the purpose of this post, the map below is for Desoto County. To see if you are in an eligible area, go to: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do.
With the demise of 100% conventional conforming loans, there has been a large resurgence of these types of loans. Because this is a government guaranteed loan, many loan officers/ loan originators may not like to offer these programs to their prospective clients and may not even be knowledgeable enough to offer them. This is a good loan program, but like every other program, is not the "right fit" for everyone. Because this loan was specifically intended for low-to-moderate income families with minimal resources for down payment, there are some qualifying criteria...
Property eligibility - refer to map below. Property has to be located in an area designated by USDA as rural.
Debt-Ratio requirements - standard 29 (housing ratio)/41 (total debt ratio), but can be exceeded with higher credit scores and compensating factors.
Income limitations - uses total household income - number in household 1 - $49,550.00, 2 - $56,600.00, 3 - $63,700.00, 4 - $70,750.00, 5 - $76,400.00, 6 - $82,050.00, 7 - $87,750.00 and 8 - $93,400.00. These are the new 2008 income figures and represent NO GO Zone - for GO Zone, use the (family of 4) income limits for 1 through 4 family members and when there is above 4 in the household, use (family of 8) income limits.
Now for the POSITIVES:
- 100% financing (102% financing with the 2% funding fee)
- NO first-time homebuyer requirement
- NO down payment
- NO private mortgage insurance
- Conventional 30 year fixed interest rates
- Flexible Credit and Qualifying Guidelines
- 620 or higher, automatic credit approval
- 660 or higher, will waive qualifying 29/41 ratios
- Seller contributions are NOT limited to 6%
- NO sales price limit
- Closing costs can be financed if equity available
- NO investment properties allowed
Ask your loan officer for more information and if they know and are comfortable offering this mortgage product to your customers. If they are not, then your clients may be missing a good mortgage option!
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