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Rural Housing Loans - No money down - USDA loans

no money down

Rural housing loans are not FHA loans. They do follow some of the same requirements of the FHA loans, but can be a little stricter than FHA also.

Rural housing loans aka USDA loans, can be used for both purchases and refinancing. And don't be fooled by the name rural housing loans, that it just has to be rural. It's just a term, hence why these loans might have been used as much in the past. You would be surprised in some areas that these loans are allowed in.

So, what are some of the major benefits to the Rural Housing Loans?

up to 100% LTV

no monthly mortgage insurance

you can get up to 6% seller concessions

up to 102% LTV when you finance the HUD Guarantee fee of 2%

qualifying ratios of 29/41 (it could be a tad higher depending on compensating factors) FHA loans are 31/43 and can be higher with compensating factors

credit guidelines can be flexible - 600 credit scores will get the deal done. 580 to 599 will be screened.

looking for a very good housing history - typically no lates in the last 12 months, preferably in the last 2 years.

no judgments, collection accounts, or charge-offs in the last 12 months (case by case at times)

no foreclosures in the last 3 years

very minimum 30 day lates in the last 12 months on revolving credit or installment loans

escrows are required

no prepayment penalties

there are income qualifications based on 115% of area median income (please e-mail me for details)

Overall, this could be a very useful program. It's not for every town or city, hence why it's called the rural housing loan. Again, as I stated above, you might be surprised in what areas are allowed.

For more information on your income limitations or area restrictions, please e-mail me at : jbelonger@ihmci.com

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Posted by Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans on 11/18/2008 11:22 PM

Comments (15)

USDA Rural Housing Loan in the ActiveRain Channel

usda loans, usda rural housing loans, rural housing loans, no money down, 100 percent financing, down payment assistance, fha loans, mortgages

Originally posted at: FHA Mortgage Expert - Tri-State Area - New Jersey/PA/Delaware: Rural Housing Loans - No money down - USDA loans

This post has been included in New Jersey Information Camden County, NJ Information Cherry Hill, NJ Information
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15 Comments on Rural Housing Loans - No money down - USDA loans

NOV

2008

Jeff - How timely that you just wrote this post. I was contacted a few days ago by a local lender who saw that I had a listing that would fit the guidelines for a USDA loan. I was unaware that this type of loan even existed. I think it can really help open the door for buyers looking for homes fitting the criteria.

Good post. I think this is a great program as well. We use it here in Arizona and are surprised at some of the area that qualify for Rural Housing loans.

NOV

2008

DONNA.... . yes, this kind of loan can really help open up the doors. But if that lender is just average, they could screw this kind of loan up. It has some of the same characteristics of a FHA loan, but is a little harder in some areas. And I have seen many screw up FHA loans, so I could just imagine what some loan officers would do to this loan. Just make sure this guy, giving you info, knows what they are doing and talking about. thanks for your feedback.

JUBAL.... . it's a very good program and as I mentioned, it's not as well-known or used, because it has rural housing in it... and many people associate that with property out in the boonies or like farm area... thanks

Hey Jeff ... Does Santa Claus Indiana (Spencer County in general) Qualify for the program? I've heard 620 was the FICO for that program so I'm wondering if you have different guidelines. Also; are they treating a short sale the same as a foreclosure in regards to the 3 years?

I'm glad you posted this.

I use this quite a bit nowadays. I also do some home loans with excess acreage. Now that can be a challenge!

Jeff, I was told about the USDA loans a little over a month ago. The northern edge of the county I live in qualifies as well as several surrounding counties. I have to tell you, I was a tad bit upset that this loan option was not brought to my attention until after DPA programs went away. Why was it such a secret?

This has been my favorite program for years. it is a great program for a first time home buyer. It takes little money to get in your first home and the payment come out reasonable with the borrowed MIP and seller assist. It is a little harder to qualify for, but they actually made it a little easier a few months back.

Jeff,

Firstly thanks so much for posting about the USDA Guaranteed Rural Housing Program. There are so many people that follow your blogs and your "stamp of approval" goes a long way to increase awareness. I would like to encourage you to repost this blog in the RD Group here.

Also, knowing the program is tweaked from state to state to reflect various local factors, I do, however, need to clarify some issues on your post that apply nationwide:

there is no express limit to seller concessions.
the maximum loan amount can be up to 100% of appraised value, regardless of the contract sales price. Any amount above the sales price can be used to finance closing costs and the 2% guarantee fee can be added to that.
ratios for homes built after 01/01/01 are increased to 31/43 in Florida due to increased energy efficiency. That likely applies to other states as well, but I honestly haven't bothered to check.
the credit score thresholds are actually 580,620 and 660. Below 580 a loan is severely scrutinized and will generally not be granted. Most lenders don't even accept files below 580 anymore (much like FHA) but I still do have sources for them. Between 580 and 620 derogatory credit must be explained and "risk layering" (higher ratios, high payment shock, etc.) is generally not allowed, so a loan with a 600 score is not a "gimme". Over 620 allows for streamlined credit approval and no rent verifications or credit explanations are needed, even if they have lates within 12 months. Once you hit 660 it automatically qualifies you debt ratio exceptions.

There is so much renewed interest surrounding these loans now that some affordability has returned to the market. It's great to see more and more people blogging about it and using it. Keep up the good work getting the word out! There are a number of changes coming about after the first of the year that will make the program even better (currently you need an exception for a home with an in-ground pool, that will go away) and the automated underwriting system "GUS" is expected to be rolled out to brokers.

With so much negative news surrounding our industry it's nice t be able to talk about things getting better!:-))

Gerry Suarez, Jr.

Your FHA Loan Pro

Jeff, we have been using this, especially this year as more programs became non-existent. Areas one never thought of being classified as "rural" qualify. Too, for a long spell the pricing was often better than FHA.

I like some of your articles on activerain and I'm going to put a national referral group together at

www.realestateloans.com within the next few weeks.. I'd like you to consider joining my group. REL has just opened

up their domain and I think its going to be great for us.

http://mikerogers.realestateloans.com/

NOV

2008

Jeff,

Thanks for this post. I need a lender familiar with this program to handle a FSBO by me of one of my rental houses I want to sell. Could you contact me about working together.

Thanks,

Spencer Hill

NOV

2008

Good post . I heard of this recently and much of my trade area is covered.

We have seen a fair number of Rural Housing loans in our area over the last few years, but according to bankers, not as many as our area could have. It is an under-utilized program.

JUL

i have seen so many Rural housing loans but my opinion abt this category is differnt so i think FHA loan are much better so keep it up mate and have a nice time!

OCT

I am located in MD and practice mortgage originating. I am having trouble finding out what zip codes are included in this program. Please advise.

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