Admin

USDA RD Housing income limit rules update

By
Mortgage and Lending with Major Mortgage Team Reliance

Earlier in November the final ruling was published to simplify the USDA Rural Housing program’s income limit structure for the USDA Guaranteed Rural Housing Program. These income structural changes will become effective on January 20, 2009, unless they receive adverse comments by January 5, 2009. They had put an advance notice out about trying to do this on April 10, 2008 and have not yet received any adverse comments so this should be a non-issue.

In essence, the current income limit structure that is based on household incomes from one to eight persons (in the household) would be restructured as follows:

1-4 person households will be qualified using only the 4-person limit and 5-8 person households would be qualified using only the 8-person limit.

What does this mean? It means that a lot more people will be able to qualify for this program! Currently, most counties in Colorado (including Mesa County) have the following income limits in place:

1 person $49,550 2 person $56,600 3 person $63,700 4 person $70,750

5 person $76,400 6 person $82,050 7 person $87,750 8 person $93,40

Under the new rules, the following would be the norm:


Any household having between 1 and 4 persons living in it would have max income of $70,750


Any household having between 5 and 8 persons living in it would have max income of $93,400


As you can see, this will certainly help to qualify a lot more people into a rural housing loan!


I have had clients that were single that made $54,000 and were only $4,450 above the 1-person limit but because they were over at all, were not able to qualify.


As a buyer, this is an opportunity to buy real estate with NO MONEY DOWN and qualify with higher income limits!


As a Realtor®, this is a HUGE opportunity to sell homes with no money down to people with much higher income levels!


At this point, we are not using these levels but in order for us to be able to use these changes, the new income limits must be approved and in use at the time our files are sent to the USDA Rural Development office. Currently, the earliest date for that occurring is January 20, 2009.


If you have buyers sitting on the fence, it is certainly possible to have them write contracts that don’t close until January 21, 2009 and allow your buyers to get the benefit of this program. And if it’s a short sale, it may take that long anyway!