USDA Loans - The Rural Housing Loan - The Basics

Reblogger Chuck Capan
Real Estate Agent with REMAX River Cities

 

The following entry is courtesy of Jeff Belonger of Cherry Hill NJ, a nationally respected expert on all aspects of mortgage lending. Please visit Jeff's website http://www.fhaloansfhamortgages.com, there you will find a virtual treasure chest of mortgage information.

 

USDA Loans - rural housing loansUSDA loans in many areas are becoming more popular, yet many loan officers still don't know much about them, hence why they still aren't talked about much. Just as FHA loansweren't used as much as they should have from 2000 - 2006, because subprime and some conventional loans were easier for the loan officer to give to the consumer, even though it might not have been the best loan for them. I am sure in some cases, FHA loans are given before the USDA loan because of the lack of education on the loan officers part.... just my .02.

 

Some great benefits that USDA loans offer -

  • It's one of only two types of mortgages that offer real 100% financing, with no money down on the property. The other would be VA loans.
  • Just because it says rural development doesn't mean farm land or properties that are miles apart from each other. Ask your loan officer if your property that you are looking to purchase might fit into the property location guidelines.
  • There is no monthly mortgage insurance, even with zero down payment. The only other mortgage like this, again, VA loans.
  • There is no seller contribution limit, just as in FHA loans, to where the seller can contribute up to 6%. It's look upon as reasonable closing costs.  And keep in mind, each state has their own limits to what a lender can make anyhow, usually falling under section 32.
  • 100% of the closing costs can be gifted.
  • The loan amount can include closing costs and repairs up to the appraised value. (call me or e-mail me for more of an explanation)
  • Credit scores of 580 and below are highly scrutinized by USDA. There are many things that need to be looked upon. Scores from 620 and above meet the normal credit standards and get an automatic credit waiver on such things as explaining derogatory credit and rental verifications.
  • Normal qualifying income ratios are 29%/41%. You can exceed these ratios if you have scores above 660 and you don't have to apply for a debt-to-income waiver. Those below 660, you have to have compensating factors and apply for an income ratio waiver.
  • There are income restrictions, yet as of April 20th, 2009, there will be new income limits for the better. Basically the 4 person income limits will now be for 1 person income limits.
  • One important thing to remember, you can't have an in-ground swimming pool if you are using USDA that came from the 2009 stimulus bill. If it's the normal USDA monies allocated yearly, then it's okay, but you need to check on this with your lender.

 

 

 

IMPORTANT -  These are USDA's guidelines, yet lenders can after overlays, to where they might be more critical on credit scores or debt-to-income ratios.  Please keep this in mind.

 

 

 

 

follow Jeff Belonger on Twitter

 

 

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- Mortgages -

 

Experience & Knowledge at its BEST !!!

 

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger

Original content by Jeff Belonger

 

USDA Loans - rural housing loansUSDA loans in many areas are becoming more popular, yet many loan officers still don't know much about them, hence why they still aren't talked about much. Just as FHA loansweren't used as much as they should have from 2000 - 2006, because subprime and some conventional loans were easier for the loan officer to give to the consumer, even though it might not have been the best loan for them. I am sure in some cases, FHA loans are given before the USDA loan because of the lack of education on the loan officers part.... just my .02.

 

Some great benefits that USDA loans offer -

  • It's one of only two types of mortgages that offer real 100% financing, with no money down on the property. The other would be VA loans.
  • Just because it says rural development doesn't mean farm land or properties that are miles apart from each other. Ask your loan officer if your property that you are looking to purchase might fit into the property location guidelines.
  • There is no monthly mortgage insurance, even with zero down payment. The only other mortgage like this, again, VA loans.
  • There is no seller contribution limit, just as in FHA loans, to where the seller can contribute up to 6%. It's look upon as reasonable closing costs.  And keep in mind, each state has their own limits to what a lender can make anyhow, usually falling under section 32.
  • 100% of the closing costs can be gifted.
  • The loan amount can include closing costs and repairs up to the appraised value. (call me or e-mail me for more of an explanation)
  • Credit scores of 580 and below are highly scrutinized by USDA. There are many things that need to be looked upon. Scores from 620 and above meet the normal credit standards and get an automatic credit waiver on such things as explaining derogatory credit and rental verifications.
  • Normal qualifying income ratios are 29%/41%. You can exceed these ratios if you have scores above 660 and you don't have to apply for a debt-to-income waiver. Those below 660, you have to have compensating factors and apply for an income ratio waiver.
  • There are income restrictions, yet as of April 20th, 2009, there will be new income limits for the better. Basically the 4 person income limits will now be for 1 person income limits.
  • One important thing to remember, you can't have an in-ground swimming pool if you are using USDA that came from the 2009 stimulus bill. If it's the normal USDA monies allocated yearly, then it's okay, but you need to check on this with your lender.

 

 

 

IMPORTANT -  These are USDA's guidelines, yet lenders can after overlays, to where they might be more critical on credit scores or debt-to-income ratios.  Please keep this in mind.

 

 

 

 

follow Jeff Belonger on Twitter

 

 

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- Mortgages -

 

Experience & Knowledge at its BEST !!!

 

_________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!

Copyright © 2009 by Jeff Belonger

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Rainer
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Bill Saunders, Realtor®
Meyers Realty - Hot Springs, AR
www.BillSellsHotSprings.com

Hey Chuck,

Thanks for posting this info. It is such good information for those of us in areas that qualify for USDA/RD loans.

all the best...

May 06, 2009 12:49 AM #1
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Chuck Capan

REALTOR Licensed In IL. - Moline Homes Quad Citie
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