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Yvette M. Palmer, Associate Broker
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USDA Loan Guidelines
USDA loans are the same as conventional loans or FHA loans as they don’t have a crazy payback schedule and the loan is extended out for 30 years. These loans are geared towards home buyers who want to buy in a rural area. You have the ability to finance closing costs into the loan and the underwriting guidelines are relaxed with lower credit ratings. The USDA loan program is not limited to first time home buyers. The loans were set up to assist eligible homebuyers regardless of whether they have previously or currently own a home. However, the property needs to qualify and the homebuyer meets strict income requirements.
USDA Loans are used to boost home ownership by helping 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. The USDA Rural Loan Program is a 30 year fixed rate mortgage loan crafted for the low to moderate income home buyer. The home is required to be located in the USDA eligibility map.
 
The USDA programs rely on a fixed appropriation from Congress, and new loans can't be made once that allocation is exhausted.

USDA LOAN GUIDELINES

 
BASIC REQUIREMENTS
The borrower cannot currently own a home and must have insufficient resources to qualify for a conventional home mortgage.
 
CREDIT SCORES
Borrowers need to have a credit score of at least 620 and possibly lower due to not having credit history. Credit history must indicate a reasonable ability and willingness to meet obligations as they become due. 
 
GRACE PERIOD AFTER A FORECLOSURE
If you have had a foreclosure, you will need to wait a minimum of three years to qualify for a USDA Loan. In addition, your name needs to be removed from the CAVIRS database in order to become eligible.  
 
AREA ELIGIBILITY
The property most be located within an eligible low density area. 
 
INCOME CAP AND REQUIREMENTS
There are maximum income requirements that vary by state and county, and by family size. Typically, adjustments are made for disabilities, dependents and so forth. A borrower can't have income that exceeds 115% of the median county income. Look up Income Limit by county.
 
NO DOWN PAYMENT
100 percent financing available with no down payment required. Eligible repairs and closing costs may be included in the loan up to the appraised value of the property.
 
LOAN LIMITS
The maximum loan amount is 100 percent of the appraised value plus the upfront guarantee fee. The total amount a person can borrow depends on a number of factors, including: Value of Home; Monthly Income; and Debt to Income Ratio.
 
ANNUAL FEE PAID MONTHLY 
The current annual fee is 50 percent. The calculation is based on the average annual scheduled unpaid principal balance for the life of the loan. The fee is calculated when the loan is made and every 12 months thereafter until the loan is paid.
 
UPFRONT MORTGAGE INSURANCE
Effective 10/2015 the upfront guarantee fee may be included in the loan amount above the appraised value and it's currently set at 2.75 percent.
 
HOUSING STANDARDS
Housing must be modest in size, design, and cost. Houses constructed, purchased, or rehabilitated must meet the voluntary national model building code adopted by the state and HCFP thermal and site standards. New Manufactured housing must be permanently installed and meet the HUD Manufactured Housing Construction and Safety Standards and HCFP thermal and site standards. Existing manufactured housing will not be guaranteed unless it is already financed with an HCFP direct or guaranteed loan or it is Real Estate Owned (REO) formerly secured by an HCFP direct or guaranteed loan.
 
OWNER OCCUPANCY
The individuals obtaining the loan must also have the intent to occupy the single family home.
 
 
 

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