USDA Loans - The Rural Housing Loan - The Basics

Reblogger David Patterson
Real Estate Agent

Are you looking for a 100% Financing Mortgage and don't qualify for VA Loan?

You should really consider the USDA/Rural Housing Loan.

Here's Jeff Belonger with the details!

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.

 

 

 

 

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- 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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Janna Scharf
Keller Williams Realty Coeur d'Alene - Coeur d'Alene, ID
Coeur d'Alene Real Estate Pro

Hey David, thanks for sharing this info.  It really breaks it down into easy-to-understand language for the consumer. 

May 07, 2009 08:19 AM #1
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Jim Valentine
RE/MAX Realty Affiliates - Gardnerville, NV

David - Thanks for getting the word out.  This is a great program that can do miracles for the buyers.  The "gap" money can be a true blessing to some buyers.  We've closed several and are very supportive of it. 

May 07, 2009 09:39 AM #2
Anonymous
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David

David,

Make sure people know that manufactured homes don't qualify on the USDA program.  We tried to get a loan for one and did not find out they did not qualify until after our offer was accepted.

Thanks!

 

May 07, 2009 05:52 PM #3
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

David,... thanks for the polite introduction and for reblogging this.  This is a great program.  Between this and FHA, I hardly do conventional loans, even if they have 20% down.  Here is a good example of that : FHA loans vs conventional loans - 20% down - a rude reality check  I only would do conventional if they had more than 20% down with credit scores above 700...  in most cases.  Again, thanks for the polite reblog.

jeff belonger

May 07, 2009 06:29 PM #4
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Mark Brian
Silver Star Real Estate LLC - Anderson, SC
Anderson SC Realtor

In my area, many people are using the Rural loans to take advantage of the great deals and interest rates. This is great information for many buyers to be made aware of.

May 08, 2009 10:51 AM #5
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David Patterson

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