100% Financing for Civilians: What's the Latest On USDA Rural?

By
Mortgage and Lending with SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) NMLS 223495

USDA RURAL LOANS: Mike in Tucson, AZ mortgage lenderUSDA Property & Income eligibility: Mike in Tucson, AZ mortgage lenderWhat's the latest (February 2011) on USDA Rural loans?

Question:  "In my listing area, we rarely have a home that qualifies for USDA Rural financing.  I have two questions:  (1) How can I tell if a particular home is eligible for a USDA Rural loan, and (2) What are the guidelines to qualify my buyer?

First, some benefits of USDA Rural

  • No mortgage insurance
  • 100% financing is available for non-veterans with a 3.5% GRH fee added.
  • Loan amount can equal the Appraised Value, if higher than the sale price, to include the closing costs in the loan.

Question 1:  Property Eligibility ~ How can I tell if a particular home is eligible for a USDA Rural loan?

Anyone (buyer or agent) can find out the eligibility of a particular property. Both single family and multi-family housing units can be eligible.

  1. Click this text link to open the Income & Property Eligibility Site in a new window.
  2. Click on Single Family or Multi Family Housing link
  3. Accept the disclaimer ~ they want to be sure you don't sue them...
  4. If you have a particular address in mind, enter it now to see if it's eligible.  Otherwise,
  5. ...Select your State or TerritoryUSDA Property & Income eligibility: Mike in Tucson, AZ mortgage lender
  6. Select your county.
  7. See the Eligible and Ineligible areas, or enter an address.

Question 2:  Income Eligibility ~ How can I tell if my buyer makes too much money to qualify?

  1. Click that same text link above.
  2. Click the Single Family Housing link under Income Eligibility.
  3. Follow the prompts for county, household, etc.  It's that easy!

A Few Important Guidelines for USDA Rural Loans

Citizenship:  Non-resident aliens must have a valid Green Card.  Work visas are not accepted.

Credit Score:  620 or higher.  Borrower must have at least two scores.

Rental History:  Required with credit scores under 660.

Debt Ratios:  29% front end (House payment)  41% back end (House payment, car payment, credit card payments, student loans, and so on...)  You can ask for a debt ratio waiver, but these are not easily obtained. 

Compensating Factors: Compensating factors which might facilitate a debt ratio waiver include credit score above 660, job stability, recent savings and reserves, documentation that credit problems were of a temporary nature and were beyond the borrower's control ~ e.g. death of a spouse, divorce, serious illness or loss of a job, and more.  Be advised by your loan officer for other compensating factors. 

Please note that Debt Ratio Waivers are approved by USDA, and are not automatic.

Mortgage lates:  Maximum 1 30-day-late in the previous 12 months.

Bankruptcy:  Must be discharged 36 months (AZ,) and borrower must have re-established credit.

Foreclosure:  Must have occured at least 36 months ago.

Refinance:  Only if the loan being refinanced is a USDA Rural loan.

Non traditional credit:  No longer allowed.

Student Loans:  Must count, even if deferred.  Underwriter will use 2% of the loan amount as the monthly obligation.

Seller concessions:  Seller may contribute up to 6% of the loan amount toward the buyer's closing costs.

Termite Report / Septic Tanks:  Required on purchases.

Well test:  Required

Manufactured Homes:  Not allowed.

_____________________

I'm Mike in Tucson, your preferred Tucson Arizona Mortgage Lender.

NMLS #223495

SUNSTREET MORTGAGE llc ~ Correspondent Mortgage Bank
Offices (AZ) Mesa, Tucson, Sierra Vista, & Nogales.

 

 

 

 

Comments (12)

Brian West
imortgage - Gilbert, AZ
Arizona Lender

Excellent post! You really covered all of the bases in here. Nice work!

Feb 03, 2011 04:21 PM
Eileen Liles
970-216-0530 http://WeSellDeltaCounty.com - Cedaredge, CO
Macht-Liles Real Estate Group - Cedaredge, CO

Great job, Mike!  RD is our main lending product right now as our whole county qualifies.  But a part of me DOES realize this is just another federally subsidized loan product.

Feb 03, 2011 04:48 PM
Eileen Liles
970-216-0530 http://WeSellDeltaCounty.com - Cedaredge, CO
Macht-Liles Real Estate Group - Cedaredge, CO

Tried to "re-blog" but says re-blogging is temporarily disabled.  Shucks!  This is really concise, straight-forward info on USDA loans. I'll try again tomorrow.

Feb 03, 2011 04:50 PM
Fred Griffin Tallahassee Real Estate
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

Thank you Mike, for a very comprehensive, up to date and informative post on USDA Rural Loans!

Feb 03, 2011 04:51 PM
Mike Jones
SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) - Tucson, AZ
Mike Jones NMLS 223495

Fred,

You're welcome!  It's a wonderful program.

Eileen,

The "temporarily disabled" message is Active Rain.  I haven't disabled the ReBlog button.  Thanks for trying; keep it up!

Brian,

Thanks.  And thank you for being the first to comment.

Mike in Tucson

Feb 04, 2011 02:03 AM
Mark Nehs
Mortgage Loan Officer Waukesha Wisconsin - Pewaukee, WI

Mike,

USDA loans are so misunderstood.  Everyone should read your blog.  Well done.

Feb 04, 2011 01:44 PM
Cara Marcelle Mancuso
Long Realty - Dove Mountain, Marana AZ - Tucson, AZ
Call a Marana neighbor, I'm THERE! LONG REALTY

Worthy of bookmark - thanks for another great resource.  I may have a listing that will be quite rural and was just talking about this program today - I need to look it up.  It would be good information to have in the home when open for viewers.

Feb 04, 2011 03:59 PM
Mike Jones
SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) - Tucson, AZ
Mike Jones NMLS 223495

Cara,

USDA is very useful in Tucson.  Mostly it's north of Tangerine and south and east of Rita Ranch.  Also west on Ajo, where we live.

Mark,

Thanks for saying so!

Mike in Tucson

Feb 05, 2011 12:49 AM
Cara Marcelle Mancuso
Long Realty - Dove Mountain, Marana AZ - Tucson, AZ
Call a Marana neighbor, I'm THERE! LONG REALTY

I checked out the address and it qualifies.  Now if my seller truly shows hardship, I'll take the listing and make sure I have information on the program near my information book.  Thanks again for all this information in one tidy place!

Feb 05, 2011 04:57 AM
Jennifer Fivelsdal
JFIVE Home Realty LLC | 845-758-6842|162 Deer Run Rd Red Hook NY 12571 - Rhinebeck, NY
Mid Hudson Valley real estate connection

Mike thanks for the reminder about this product, I have not looked at it recently.

Feb 05, 2011 03:24 PM
Gabrielle Kamahele Rhind
KGC Properties LLC, Tucson Property Management & Real Estate - Tucson, AZ
Broker/Owner

GOOD MORNING MIKE!  Tried to re-blog this and then remembered that feature is unavailable right now! May I share it on my FB page?!!  --G

Feb 05, 2011 10:43 PM
Mike Jones
SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) - Tucson, AZ
Mike Jones NMLS 223495

Gab,

You don't ever have to ask.  Just do it!  :)

Jennifer,

It's a great program!

Cara,

You're welcome!  Good luck with your buyer.

Mike in Tucson

Feb 06, 2011 07:32 AM

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