USDA Loans, Why Haven't I had buyers use this loan before?

By
Real Estate Agent with Realty ONE Group

I am starting a new journey. One with a buyer doing an USDA loan. USDA loans are loans that help buyers purchase a home in a rural area with 0% down and good interest rates. Now, you must be thinking, Rural, that isn't where I am living, but it actually covers a large area. I have attached the map below so you can see what areas are considered "Rural". 1st of all most, if not all, of Queen Creek is considered rural from - East of Power Road, South of Germann. All of the City of Maricopa and San Tan Valley are eligible. And on the West side of the Valley, anything west of 187th Ave is eligible.

The USDA Website says:

"Purpose: Section 502 loans are primarily used to help low-income individuals or households purchase homes in rural areas. Funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities.

Eligibility: Applicants for direct loans from HCFP must have very low or low incomes. Very low income is defined as below 50 percent of the area median income (AMI); low income is between 50 and 80 percent of AMI; moderate income is 80 to 100 percent of AMI. Click here to review area income limits for this program. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance, which are typically 24 percent of an applicant's income. However, payment subsidy is available to applicants to enhance repayment ability. Applicants must be unable to obtain credit elsewhere, yet have reasonable credit histories.

Terms: Loans are for up to 33 years (38 for those with incomes below 60 percent of AMI and who cannot afford 33-year terms). The term is 30 years for manufactured homes. The promissory note interest rate is set by HCFP based on the Government’s cost of money. However, that interest rate is modified by payment assistance subsidy.

Standards: Under the Section 502 program, housing must be modest in size, design, and cost. Modest housing is property that is considered modest for the area, does not have market value in excess of the applicable area loan limit, and does not have certain prohibited features. Houses constructed, purchased, or rehabilitated must meet the voluntary national model building code adopted by the state and HCFP thermal and site standards. Manufactured housing must be permanently installed and meet the HUD Manufactured Housing Construction and Safety Standards and HCFP thermal and site standards."

As far as writing an offer, it is pretty much like an FHA offer. You can ask for closing costs to be paid for by the seller, the house has to pass an appraisal similiar to FHA guidelines. Not much different on the agent's part for writing or accepting an USDA loan offer. The buyer will have to do up front work with the lender to make sure they qualify, but after they are approved, it is a pretty simple process.

 

Click Here to type in an address and it will tell if it is in an eligible area or not.

If you would like more information about buying a house with 0% Down Payment, contact me and we can see if you are eligible and if the subdivision you want to live in is also eligible.

Map of USDA Eligible Areas

Posted by

Betsie Melter, REALTOR, GRI, ABR

Realty ONE Group

3530 S. Val Vista Dr. #114 Gilbert, AZ 85297

480.734.3644

realtorbetsie@gmail.com

www.betsiemelter.com

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
ActiveRain Community
Location:
Arizona Maricopa County
Tags:
usda loans how to buy with 0 down

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainer
106,097
Jessica Holtzman
Keller Williams Realty, Inc. - Moorestown, NJ
Real Estate Agent in Southern New Jersey, CDPE

I almst had one of these deals, but in the end, it changed last minute.....  Back to FHA

Feb 22, 2012 06:21 AM #1
Rainer
33,030
Betsie Melter
Realty ONE Group - Chandler, AZ

Jessica,

Did the eligibility criteria change or did the buyer change their minds? I just want to know if I should prepare for a nightmare at the end with lender requirements. THanks.

Feb 22, 2012 06:30 AM #2
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainer
33,030

Betsie Melter

Ask me a question
*
*
*
*
Spam prevention

Additional Information