USDA Rural Home Loans are a sought after program by consumers, so it is important for Realtors and homebuyers to understand the facts about this unique and valuable program.
In addition to saving money with no down payment, USDA loans offer the ability to finance out of pocket settlement charges. In cases when the appraised value is higher than the sales price, USDA loans will provide this added flexibility and allow homebuyers the option of financing these expenses.
FHA, Conventional, and VA loans will not permit the financing of these costs.
With all of the above mentioned benefits, please note that there are two main requirements needed before additional eligibility can be reviewed.
USDA eligible areas and income limits can be found directly at the USDA website.
Qualifying for a USDA Home loan can be both difficult and overwhelming, but when you work with a lender that specializes and understands the USDA loan process, it is a match that can open the door to home ownership.
If you are looking to purchase a home within the next 6 months click here for your USDA Blueprint for Success!
For more immediate scenarios click here to apply online for a USDA mortgage today!
So, keep us in mind for your next pre-qualification or if you have a current transaction experiencing financing difficulty and need an expert opinion.
Just call or email to discuss your scenario and let us show you the “Metroplex” difference!
Toll Free: (800) 806 – 9836 Ext. 280
We are known for returning calls, replying to your emails, and responding to voice mails.
Please remember that mortgage requirements are constantly changing so stay current and up to date by subscribing on the right for future video tips.
Powered by Facebook Comments
Per Administrative Notice 4699: “An existing dwelling must meet HUD Handbooks 4150.2 and 4905.1”
These sections cover both existing housing property requirements and valuation analysis for Single Family homes. FHA roster appraisers will follow this when completing a USDA appraisal.
The existence of kitchen appliances is not a minimum property requirement (MPR), and the appraiser should not complete the appraisal subject to the installation of appliances.
However, please remember that if the subject property does not have appliances, then the appraiser will need to consider any applicable adjustments when determining value.
Remember that today’s topic covered minimum appliance requirements, but understand that additional conditions can be requested by the underwriter or appraiser that go above and beyond depending on the circumstances of the situation.
If you’re already approved, and in process with a contract, please consult with your lender for any specific transaction related questions that may apply.
Can you qualify for a USDA loan if you already own a home? This is a common question, and while this scenario can be possible, additional USDA qualifying guidelines will apply.
The USDA Rural Loan Progam may not be used for second homes or investment properties. Only for primary residences located in eligible areas.
However, in situations where a homeowner wants to purchase a new primary residence before their current property sells, a USDA loan can help, but proceed with caution!
In order to qualify for a USDA loan with this scenario, the loan will have to be approved by both underwriting and USDA Rural Development (RD) to have met their property superiority condition which could be anyone of the following:
Upfront work and communication at the beginning is critical between all parties to determine if this could be considered an eligible situation.
USDA income limits for the Guaranteed Program are both generous and based on household income size, but many are not familiar with the eligibility advantages for what is considered a high-cost county.
While many make the assumption that the USDA loan program is strictly for smaller loan amounts, this is simply not true. Unlike FHA loans, for example, the USDA loan program does not have a set loan limit. The maximum loan size is based on the applicant’s ability to repay.
The USDA Guaranteed Rural Housing (GRH) Program breaks down income limits for tiers of 1-4 person households and 5-8 person households. Income calculations vary from state to state and from county to county.
High cost counties are considered part of a Metropolitan Statistical Area (MSA), so the income limits are increased to allow for the higher cost of living. The United States Office of Management and Budget defines an MSA to “have at least one urbanized area of 50,000 or more population, plus adjacent territory that has a high degree of social and economic integration with the core as measured by commuting ties.”
For today’s comparison, we’ll use the Florida counties of Highlands and Collier.
USDA income limits for Highlands County start at $74,750 for a household size of 1-4 and increase to $98,650 for households consisting of 5-8 members. In comparison, Collier County has income limits of $83,750 and $110,550 respectively.
Please note that household income eligibility is based on total income by all household members, NOT just those who are on the loan application.
While this topic can be complicated, today I will guide you step by step through the USDA website and how to determine if your income qualifies for a USDA Loan.
Please remember, this calculator is only to be used as a tool and does not guarantee eligibility. Certain income or deductions may not be applicable based on specific USDA income qualifying guidelines. The bottom line is do not qualify or disqualify yourself, always check with a mortgage professional who is experienced with USDA Home Loans.
With a growing number of students graduating and entering the workforce, this week’s tip is important for recent graduates who are interested in the USDA loan program but are unsure if they could qualify for a USDA loan with no previous work experience.
Employment history is important when determining eligibility for USDA mortgage qualifying. Customarily we will need a 2 year verification of employment history, but for cases with recent college graduates who have not had prior work experience, this can still be possible.
Administrative Notice (AN) 4699 states: The lender may consider reasonable allowances for applicants with less than 12 months of job time at their current employer, with one of the allowable circumstances being that the applicant is a recent graduate, as evidenced by college transcripts.
Additional underwriting review may be needed for the following:
Remember, as previously discussed, repayment qualifying income such as overtime, bonuses, and commissions would need to document a 2 year history.
As a reminder, all current USDA eligible areas have been extended through September 30th, 2014 due to the passing of the Omnibus Spending Bill. Today I will walk you through the steps on how to determine property eligibility on the USDA website.
For todays example, I will be using the city of Sebring, Florida which is located in Highlands County.
Please note, that even though Congress is working to extend most, if not all, eligible areas through 2020 with the proposed Farm Bill, the new spending bill only extends current eligible areas through September 30th, 2014 unless additional further action is taken.
With this in mind, now is a great time to get pre-qualified for a USDA Loan due to:
After HR 2775 ended the government shutdown in October of 2013 Congress had a deadline of January 15th to pass another funding deal, either a full spending bill for fiscal year 2014 or another Continuing Resolution, to avoid another shutdown. We are happy to report that they not only have agreed to pass the Omnibus Spending Bill for fiscal year 2014, but also the FY14 Consolidated Appropriations Act that directly impacts the USDA Loan Program!
Congress passed the FY14 Consolidated Appropriations Act this week, which is part of the Omnibus Spending Bill that passed last month which funds the government for the remainder of fiscal year 2014.
Section 737 of the bill extends the rural definition through the end of the fiscal year, which ends on September 30th, 2014. As a result, all communities that are currently eligible for the USDA loan program will remain eligible through the end of the fiscal year. This continues to provide access to the USDA Rural Development Loan Program for more than 900 communities nationwide.
While this spending bill extends current eligibility through September 30th, Washington is working towards ensuring that many, if not all, current eligible areas remain so for the foreseeable future. The very important Farm Bill will be pushed to be voted on prior to the end of the fiscal year. As a reminder, the language in the Senate’s version of the farm bill would extend the majority of the existing areas through the next census decennial review in 2020.
So, for right now it is business as usual and don’t forget about the following highlights which are sought after by consumers:
CAIVRS stands for Credit Alert Interactive Voice Response System. This is a process that all homebuyers interested in qualifying for a federally backed loan, like the USDA, needs to pass to continue in the qualifying process. This week’s tip explains in detail the CAIVRS process and how it can impact USDA loan qualifying.
CAIVRS is a database created by the federal government to track people who are delinquent on federal debts or obligations. These obligations include federal liens, judgments, or loans in default or foreclosure, as well as any claims paid by a reporting agency like USDA or FHA. CAIVRS has delinquent borrower records from the Department of Housing and Urban Development (HUD), the Department of Veterans Affairs (VA), the Department of Education (DOE), the Department of Agriculture (USDA), the Small Business Administration (SBA), and the Department of Justice (DOJ).
For USDA specific qualifying and Per Administrative Notice 4699, any delinquent federal debt identified by CAIVRS shall cause the applicant to be ineligible until the federal debt is paid in full or otherwise resolved such as an official release of liability has been issues.
For IRS Federal Tax judgments, evidence of a payment arrangement may be acceptable provided that the underwriter determines the payment arrangement and history are acceptable.
Rural Development loan proceeds may not be used to pay off and satisfy a debt.
Due in large part to the October government shutdown, USDA processing times in Florida became severely delayed. However, I now have tremendous news to share which will greatly help both Realtors and homebuyers.
Florida Rural Development (RD) has gained significantly on the backlog of application requests for USDA loans under the Single Family Housing Guaranteed Loan Program.
As of December 31st, 2013 Florida USDA turn times have been reduced to only two weeks. This was in large part due to:
Most of us can remember that even before the shutdown Florida USDA processing times were normal to be at or above 30 days, so this is a great way to kick off 2014!
Due to the longer processing times mentioned USDA applications had decreased, but with the recent improvement it would be a safe bet to expect more Realtors and homebuyers to seek the benefits of a USDA loan as soon as possible.
USDA loans are as attractive a financing option as ever before. Especially when you consider several other important guideline changes that happened in 2013 such as:
Metroplex Mortgage Services
Toll Free: (800) 806-9836 Ext. 280
NMLS ID# 185288
Subscribe below to keep getting future updates for free!
8622 N Himes Avenue
Tampa, FL 33614
FL, AL, TN NMLS# 185264
TN Mortgage Lender License #3500
13612 Midway Road, Suite 333-05
Dallas, TX 75244
NMLS Branch License #356690
We lend in the following states: Alabama, Florida, Tennessee & Texas.
Any loan program may require sufficient equity and certain conditions may apply.