Yes you read that right.. There IS still 100% financing out there. Even better, you can roll 2% closing costs into the loan! USDA does not require any down payment from the buyer! What's the glitch? Well there are 2 main qualifiers:
a) You must not make too much money, but enough to qualify. Here's a tool to see if you do fit: http://eligibility.sc.egov.usda.gov/eligibility/incomeEligibilityAction.do?pageAction=state&NavKey=income@11
b) The property must be in a designated "rural" area. I live outside DC and there are still a ton of great areas that USDA covers within commuting distance. http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp&NavKey=property@11
USDA has a 2% guarantee fee (like mortgage insurance) rolled into the loan and a small monthly fee. These are still less than FHA and you dont need a down payment!!!!!
Some other tips you should know:
USDA has to have funds available! If they run out, usually it replenishes within a month or so. The file would just be approved subject to funds.
USDA underwrites the loan! There are no rushes; turn times depend on them. Closings have to be flexible! The USDA office closest to the subject property underwrites the loan.
Low rates.
Clients can refinance USDA later too!
Concessions: No maximium. Cant exceed closing + prepaids.
Appraisals are conventional appraisals.
Condominiums –they accept FHA, VA or Fannie/Freddie approved condos!
Clients can purchase a new home, existing home, manufacured home on perm foundation, or modular home
Clients can purchase land and build on it and later “buy it” under USDA financing
No purchase price limits. Will depend on income & property eligibility
Land value(as determined by the appraiser) cannot be more than 30% purchase price
Consumer Credit Counseling and C13 Bankruptcies: Need to verify 12 months clean payment history and get court / CCCS approvals
Borrower usually has to attend a 1st Time Homebuyer Class – can be done online
Eligible down payment assistance, seller concessions, gift, or grant programs offered by acity/county municipality or housing development authority are allowed. Gift funds fromqualified sources are allowed
Borrower can’t have 20% down available to them or they will not be eligible (401k is OK)
3 year tax returns required (to verify 1st time homebuyer and “other incomes or deductions”)
Verification of Rent / proof of housing payment usually required for 680 and under. 12 months cancelled checks or a Management company VOR is acceptable.
Must be a 1st Time Homebuyer OR
-Show that they relocated a reasonable distance from their commuting area
-Property they are vacating is not structurally sound or functionally adequate (family size etc)
-Occasionally divorce/separation; depending on situation
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