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What are USDA and FHA septic and well distance requirements?

HUD Handbook 4000.1 determines the septic and well distance requirements for both USDA and FHA loans.  This is a critical measurement which can determine the success of a transaction.

In today’s video, I will break down the USDA and FHA septic and well distance requirements and explain minimum property eligibility for both USDA and FHA loans.

However, don’t forget to download our USDA Blueprint for Success. This FREE guide is designed to help walk you through the USDA process step-by-step and is great for both Realtors and homebuyers alike!

USDA and FHA septic and well distance requirements in FloridaWhat determines the well and septic distance requirements for USDA and FHA Loans?

USDA and FHA loans both follow HUD Handbook 4000.1 guidelines for minimum property conditions.  This also includes the distance requirements for properties with a well and septic.

HUD Handbook minimum distance requirements between wells and sources of pollution for Existing Construction* are as follows: 

  • A well must be a minimum of 10 feet from the property line.
  • A well must be a minimum of 50 feet from septic tank.
  • A well must be a minimum of 100 feet from the drain field.
    • However, this distance may be reduced to 75 feet if allowed by the local authority.USDA and FHA septic and well distance requirements in Florida, Texas, Alabama, and Tennessee
  • If the property is adjacent to a residential property then local well distance requirements prevail.
  • If the property is adjacent to non-residential property or roadway, then there needs to be a well separation distance of at least 10 feet from the property line.
  • The distance requirements of the local authority will prevail if greater than what is stated in the HUD Handbook.

*Remember that this guidance is for existing properties only and different requirement will apply to new construction.

Planning ahead for USDA and FHA septic and well distance measurements

Sebring Florida and Highlands County USDA loansGenerally, septic and well distances for USDA and FHA loans are not customarily measured until after the sales contract is received.  Thus, it is critical to let us know of any upfront concerns so we can provide timely advice to help keep the transaction on track.

Don’t let the USDA and FHA distance requirements for well and septic overwhelm you… that’s what we are here for! While these properties may involve extra steps, our expertise is here to help open the door to homeownership!

Just call or email if you have any qualifying questions, want to discuss a new scenario, or would just like to take advantage of our free 2nd opinion service which is great for those existing transactions.

800-806-9836 Ext. 280
SeanS@MPLX.org

I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!

P.S. – You can download our “USDA Blueprint for Success” by CLICKING HERE.

 

USDA loans are sought after by homebuyers since they allow for no down payment and offer financing flexibility. Additionally, USDA guidelines have recently improved in regards to how much acreage can be purchased with a USDA home loan.

While it is true that you are not able to just purchase raw land with a USDA Guaranteed loan, in today’s video, I will explain how much USDA land is permitted when purchasing an existing home or with the construction of a new home. 

Plus, download our FREE USDA Blueprint for Success! This educational guide is designed to walk you through the USDA process and guidelines.

USDA Acreage Limits

To begin with, the USDA Single Family Housing Guaranteed Loan Program is designed for Single Family Housing and is not a solution for working farms or income-producing properties. Also, remember that any land that you purchase must be in connection with either an existing home or through the construction of a new home.

If you are building a home, under the USDA Single Close Construction to Permanent Program, we are able to offer no down payment USDA construction loans for Single Family, Modular, and Manufactured Homes which includes the ability to purchase land in conjunction with the construction or build on land that you already own.

Moreover, USDA guidelines do not have acreage limitations, just that it must be typical for the area as discussed below.

USDA Site Size Requirements

USDA  guidelines state the following for site size requirements: “The site size must be typical for the area.”

How much USDA land can be purchased with a USDA home loan in FL, TX, TN, or AL?

This definition clearly opens up the potential for higher amounts of USDA land to be purchased and comparable sales in the area will help to justify if the site size is typical.  As a result, do not assume that properties with increased acreage may or may not be eligible until we have a chance to review the scenario further.

USDA Land and Home Scenarios or Questions

Most of all, don’t let the details overwhelm you, because that’s what my team and I are here for! If you have any scenarios or questions, please reach out so we can provide additional guidance and upfront review in order to help determine how many acres you can purchase with a USDA loan.

If you have any questions or scenarios, please contact us by phone or email:

(800)806-9836 Ext. 280
SeanS@MPLX.org.

Summary – USDA Land

How much USDA land can be purchased with a USDA home loan in FL, TX, TN, or ALIn summary, the most important point to remember is that the size of the USDA land should be typical for the area. This is vital for determining how many acres you can buy with a USDA loan.

Our vast experience and expertise are here to aid you in each step of the process. Let us show you the “Metroplex difference!

Lastly, don’t forget to download our USDA Blueprint for Success. Make it a great day and I look forward to seeing you for the next tip of the week!

 

As we all know, student loan debt can have a major impact on mortgage qualifying! In today’s topic, I’ll explain how improved USDA guidelines on student loans have led to qualifying improvements.Improved USDA Guidelines on Student Loans!

Understanding the details can mean the difference between homeownership or a missed opportunity!

2nd opinions are always important! If you have financing questions and are working with another lender, we offer this free service so you can get access to an expert 2nd opinion.

Student Loan Debt

Improved USDA Guidelines on Student LoansUnfortunately, qualifying to buy a home with student loan debt is becoming a bigger challenge each and every day, and this is not just a problem for First-Time Homebuyers.

As we dig into the actual details, the actual numbers are somewhat staggering. In fact, recent data shows that the US has more than 42.8 million borrowers with $1.64 trillion in student loan debt.

Now, after we all have taken a deep breath, let’s get into the details of current USDA guidelines on student loans.

USDA Guidelines on Student Loans

USDA student loan guidelines have improved by reducing the amount needed for qualifying on certain student loans. This provides the ability to increase your overall budget and price range.

Fixed-Payment Student Loans

A fixed-rate loan has an interest rate that remains the same for the life of the loan.

For fixed payment loans, “A permanent amortized, fixed payment may be used in the debt ratio when the lender retains documentation to verify the payment is fixed, the interest rate is fixed, and the repayment term is fixed. The fixed payment will fully amortize/pay in full the debt at the end of the term.”

Non-Fixed Rate Payment Student Loans

USDA Guidelines on Student Loans in FL, AL, TN, TXA non-fixed rate loan has a variable interest rate that varies as market interest rates change.

For non-fixed payment loans, “payments for deferred loans, Income-Based Repayment (IBR), Income-Contingent (IC), Graduated, Adjustable, and other types of repayment agreements which are not fixed must use the greater of the following”:

  1. “One half (.50) percent of the outstanding loan balance documented on the credit report or creditor verification”, or
  2. “The current documented payment under the approved repayment plan with the creditor.”

Unlike prior USDA guidelines which required taking a full one percent (1%) of the balance on non-fixed payment loans,  current USDA student loan guidelines have improved by reducing the minimum payment to one-half percent (.50%) of the balance.

Additional USDA Student Loan Guidelines

USDA student loan guidelines provide for the following:

  • Student loans in the applicant’s name alone but paid by another party remain the legal responsibility of the applicant. The applicable payment must be included in the monthly debts.
  • Student loans in a “forgiveness” plan/program remain the legal responsibility of the applicant until they are released of liability from the creditor. The applicable payment must be included in the monthly debts

Summary

In summary, USDA guidelines on student loans have improved by reducing the amount needed for qualifying on certain student loans. This means you have the ability to increase your overall budget and price range.

How to qualify for a USDA loan with student loans in Florida, Texas, Tennessee, and AlabamaRemember, we are unique because as a USDA approved lender, we have dedicated systems in place for USDA processing. From pre-qualification through closing our high-level experience is your advantage.

Simply call 800-806-9836 Ext. 280 or email SeanS@MPLX.org to discuss your scenario, and let us show you the “Metroplex” difference!

Lastly, download any of our FREE USDA Resources here! These complimentary USDA guides and fact sheets are helpful resources that are always available for you.

Thanks for continuing to recommend us for all of your mortgage needs, and I look forward to seeing you right here next week!

Did you know that getting a USDA loan after Chapter 13 Bankruptcy can be done in as little as one day after discharge?

Yes, USDA Loan Chapter 13 Guidelines offer extreme qualifying flexibility and in today’s video, I am going to share with you a little know tip on how you can qualify for a USDA loan with only one day after a Chapter 13 Bankruptcy.

Additionally, I will walk you through the steps on how USDA loan Chapter 13 guidelines will allow you to qualify while a repayment plan is still in progress!

Now, before we get started, don’t forget to take advantage and download our USDA Blueprint for Success with the link below. This free guide is designed to walk you through the process step-by-step and is a great tool for both homebuyers and Realtors alike.

Getting a USDA loan after Chapter 13 Bankruptcy is faster than you think!

As a starting point, USDA Guidelines state that Chapter 13 bankruptcy proceedings “allow the debtor to reorganize their finances and debt payments under the supervision and approval of the court. An impartial trustee consolidates the debt and distributes money to each creditor.”

USDA qualifying after a Chapter 13 Bankruptcy is broken down into the following categories:

1. USDA Loan Chapter 13 Guidelines – Qualifying with Chapter 13 Bankruptcy Plan in Progress

USDA loan with a previous bankruptcy in FloridaYes, believe it or not, you can actually qualify for a USDA loan while a Chapter 13 bankruptcy plan is in progress!

For those loan files where GUS has issued an Accept underwriting recommendation, no credit exception is required even though the applicant is still making payments within a Chapter 13 bankruptcy!

As a quick reminder, GUS stands for the Guaranteed Underwriting System which is USDA’s automated under system (“AUS”). It provides underwriting recommendations which then determine the required level of documentation and guidelines to be followed.

However, for those files that receive either a GUS Refer, Refer with Caution, or for those manually underwritten files, USDA guidelines state the following when a Chapter 13 bankruptcy repayment plan is in progress:

  • Lender must document 12 months of debt restructure plan has elapsed;
  • All required payments have been made on time; and
  • The applicant has written permission from the bankruptcy court/trustee to enter into a mortgage transaction; (This is referred to as a “Motion to Incur Debt”)
  • If the bankruptcy court/trustee does not review or issue permissions, the creditor may determine if the applicant is an acceptable credit risk.
  • No credit exception is required!

Under either scenario, the lender must include any Chapter 13 bankruptcy payment amount within the applicant’s qualifying ratios.

2. USDA Loan Chapter 13 Guidelines – Qualifying after Chapter 13 Bankruptcy Discharge

Unlike a Chapter 7 bankruptcy qualifying which requires a longer waiting period, once a Chapter 13 bankruptcy is discharged, the following reduced waiting times

How soon can I get a USDA loan after bankruptcy in Florida, Alabama, Texas, Tennessee

will allow for faster qualifying:

For those plans that are completed (discharged) and the loan file receives a GUS Accept, no credit exception is required!

Additionally, for those who apply for a USDA loan 12 months after their Chapter 13 Bankruptcy has been discharged and receive a GUS Refer, Refer with Caution, or for those manually underwritten files, no credit exception is required.

However, if you are trying to qualify for a USDA loan with as little as one day after a Chapter 13 Bankruptcy discharge, this is still possible, but a credit exception will be required.

3. USDA Loan Chapter 13 Guidelines – Key points

In summary, USDA Chapter 13 Bankruptcy guidelines can allow for shorter waiting periods when compared to a Chapter 7 Discharge.

This can provide much-needed financing flexibility for those who may previously thought homeownership was out of reach!

USDA loan chapter 13 guidelines in Florida, Alabama, Texas, TennesseeRemember, the USDA experts on my team are here to help! Just call or email to discuss your scenario and let us show you the “Metroplex” difference.

800-806-9836 Ext. 280
SeanS@MPLX.org

I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!

P.S. – You can download our “USDA Blueprint for Success” by CLICKING HERE.

20 year leading mortgage lenderLast week, we reviewed how a Chapter 7 bankruptcy affects qualifying for a USDA loan. The next question that often comes after this information is, “How does this compare to an FHA loan?” That’s why today, we’ll review USDA vs FHA and how they differ when applying for a mortgage after bankruptcy.

Also, be sure to download our FREE Loan Comparison Chart. It combines the basic features of USDA, FHA, VA, and Conventional Loans into a simple one-page chart. Download it now!

USDA vs FHA

If you had a prior bankruptcy you can still qualify for a mortgage. However, the time at which you can qualify for a mortgage depends on the type of mortgage. That’s why we’re reviewing the qualifying factors after bankruptcy that differ between USDA loans and FHA loans.

While this may sound technical, knowing the details could help save your transaction!Okeechobee FL and Highlands County FL USDA Loans

FHA Loan After Bankruptcy

In cases where a Chapter 7 Bankruptcy includes a mortgage, qualifying issues can occur with the timing of the deed transfer.

When the deed is officially transferred out of the homeowner’s name, this is known as the deed transfer date. FHA loans base the waiting period on this deed transfer date.

Thus, it’s vital to understand that an FHA loan has a 2 year waiting period after a bankruptcy discharge and a 3 year waiting period on foreclosure completions.

Plus, the FHA 3 year foreclosure waiting period only starts after the deed transfer occurs. This could be months or even years after the actual bankruptcy was discharged.

Review – USDA Loan After Bankruptcy

Unlike FHA loans, USDA guidelines are much more flexible because they base the foreclosure waiting period off the bankruptcy discharge date. This removes the additional wait time!

In fact, USDA Guidelines state the following when a mortgage was included as part of a Chapter 7 bankruptcy:

“If the Chapter 7 Bankruptcy absolved a mortgage debt, the applicant is not legally liable to repay unless the debt was reaffirmed. Foreclosure action post Bankruptcy discharge is against the property, not the applicant, to allow the lender to obtain title.”

“However, until the property is fully titled to the lender, the applicant remains responsible for real estate taxes, home insurance premiums, HOA fees, special assessments, and similar debts.”

It’s critical to understand the details about how to qualify for a USDA loan when there is a prior deed transfer after bankruptcy – it could mean the difference between a closing or a missed opportunity!

USDA FlexibilityTampa FL USDA Approved Lender List

Thankfully, USDA loans offer guidelines with flexibility for bankruptcy situations. In fact, many loans have come across my desk for a 2nd opinion that were not reviewed properly because of bankruptcy. That’s why we are the experts when it comes to the USDA loan program!

As a USDA-approved lender, we are here to help.  Just call or email to discuss your scenario and let us show you the “Metroplex” difference!

800-806-9836 Ext. 280
SeanS@MPLX.org

As always, I want everyone to make it a great day, and I look forward to seeing you right here for the next tip of the week!

How soon can you qualify for a USDA loan after a Chapter 7 Bankruptcy?Per the administrative office of the U.S. Courts, there were 659,881 non-business bankruptcies filed for the 12 month period ending June 2020.

With that being said, many of those cases may not have been due to financial mismanagement, but instead due to hardships faced that may have been outside of that person’s immediate control.

Today’s video tip will shed light on how to qualify for a USDA home loan after a Chapter 7 Bankruptcy and as you will see, it may be quicker than you think!

Before we get started, don’t forget to download our FEE loan comparison chart.  This simple one-page chart breaks down the waiting periods required for mortgage qualification after a bankruptcy, foreclosure, or short sale.

Updated USDA Guidelines for qualifying after a Chapter 7:

USDA guidelines state the following regarding Chapter 7 Bankruptcy qualifying:

“Chapter 7 of Title 11 of the U.S. bankruptcy code controls the process of asset liquidation. A trustee is appointed to liquidate nonexempt assets to pay creditors. After the proceeds are exhausted, the remaining debt is discharged.”

“A Chapter 7 BK discharged or dismissed more than 36 months at the time of loan application is not considered adverse credit.

Can you qualify for a USDA loan with a Chapter 7 Bankruptcy less than 3 years ago?

As mentioned, if bankruptcy occurs three years (36 months) prior to the application date, it will be deemed to have met the USDA bankruptcy waiting period.

However, one exception to the three-year waiting period is when you obtain an ACCEPT response through the USDA Guaranteed Underwriting System (GUS).  When you are able to obtain this automated acceptance, USDA guidelines do not require an exception to the three-year waiting period and state the following:

“GUS may render an Accept underwriting recommendation for loan files that have been discharged from Chapter 7 BK less than 36 months. No credit exception is required.”

Additionally, if your file receives a GUS response of Refer, Refer with Caution, or for those manually underwritten loan files, you can still qualify for a USDA loan with less than three years after bankruptcy with an approved credit exception. USDA guidelines provide the following for these situations:

The approved lender may determine the applicant(s) is creditworthy when their Chapter 7 BK has been discharged less than 36 months. A credit exception must be documented and submitted with the loan file.”

Remember that GUS is USDA’s automated underwriting system and is available to assist approved USDA lenders such as Metroplex Mortgage Services in the loan approval process. If you are in need of a credit exception, please contact us today so we can help review your situation.

Summary

Florida USDA Approved Lender

In summary, while guidelines generally require 3 years (36 months) after a bankruptcy discharge or dismissal in order to qualify for a USDA loan, exceptions can be made for less than that period depending on the type of underwriting and the circumstances of the situation.

As an approved USDA lender, we are proud to be a resource and serve our rural communities!

Just call or email if you have any qualifying questions, want to discuss a new scenario, or would just like to take advantage of our free 2nd opinion service which is great for those existing transactions.

800-806-9836 Ext. 280
SeanS@MPLX.org

I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!

How soon can you qualify for a USDA loan after foreclosure?A waiting period determines how quickly you can qualify for a mortgage after foreclosure. However, that period depends on the mortgage type you are applying for. Today, we will focus on how quickly you can qualify for a USDA loan after foreclosure?

But before we get started, don’t forget to download our free loan comparison chart with the link below, this one page chart breaks down the waiting period for each loan type. (Click HERE to download)


Updated USDA guidelines state the following regarding foreclosure:

“A foreclosure is the legal process by which a lender takes control of a property, evicts the homeowner (if necessary), and sells the home to attempt to satisfy the mortgage debt. The current homeowner(s) is no longer able or willing to make agreed upon mortgage payments as stipulated in the mortgage contract.”

“A foreclosure discharged, or a repossession reported 36 months prior to the date of loan application is not adverse credit.”

Can you qualify for a USDA loan if the foreclosure less than 3 years ago?

USDA loan after foreclosure

As discussed above, if a foreclosure occurs three years (36 months) prior to the application date, it will be deemed to have met the USDA foreclosure waiting period.

However, one exception to the three year waiting period is when you obtain an ACCEPT response through the USDA Guaranteed Underwriting System (GUS).  When you are able to obtain this automated acceptance, no credit exception is required for waiting periods less than 3 years (36 months).

Additionally, if your file receives a GUS response of Refer, Refer with Caution, or for those manually underwritten loan files, a credit exception is required when the applicant has a foreclosure reporting within the three years prior to application.

As a reminder, GUS is USDA’s automated underwriting system and is available to assist lenders in the USDA loan approval process.

As a USDA approved lender, we utilize and have access to the GUS underwriting system which allows us the ability to review the findings upfront and help determine your eligibility.

Can you qualify for a USDA loan after a foreclosure that was due to a divorce or legal separation?

Thankfully, USDA guidelines address these type of foreclosure situations with the following guidance:

 “An applicant that has a foreclosure discharged or a repossession reported post-divorce/filed legal separation agreement and the home was awarded to the ex-spouse/remaining party may document the loan was paid as agreed prior to date of divorce decree/legal separation agreement. The payment history on the credit report or other documentation from the loan servicer/lender may be retained to confirm eligibility.”

Do USDA guidelines consider timeshare losses as foreclosures?

“USDA considers the loss of a timeshare adverse credit of a long-term obligation and not a foreclosure. This loss will be reflected in the credit score. Lenders must review the applicant’s credit history to determine if they are an acceptable credit risk. No credit exception is required for the loss of a timeshare.”

Thus, while the short answer is no, remember that any negative credit which results from a timeshare loss will be considered during the underwriting review.

USDA Foreclosure Guidelines

What is the USDA foreclosure wait period?Remember,  You can view all waiting periods by downloading our FREE Loan Comparison Chart.

If you have recently been denied for a mortgage because of a previous foreclosure, please take advantage of our expertise by using our free Second Opinion Service (SOS).

It’s great for both new pre-qualifications and existing transactions!

Can you qualify for a USDA Loan after Short Sale?With the many short sales that were finalized in recent years, prospective buyers are now looking to re-qualify to purchase a home. Updated guidelines specifically address how to qualify for a USDA loan after a short sale, and today’s video tip will go over the details to keep you in the know.

Before we get started don’t forget to download our USDA Blueprint for Success. This free guide breaks down the USDA process step by step, so don’t be scared – be aware!

Can you qualify for a USDA loan after a short sale? 

USDA Short Sale Qualifying Guidelines

Updated USDA guidelines state the following regarding short sales:

“A short sale allows a homeowner to sell their property for less than the balance due on the mortgage. All sales proceeds go to the lender. The lender will either forgive the difference owed or a deficiency judgment may be obtained to require the borrower to repay the lender all or part of the remaining balance. The short sale will be reflected in the applicant’s credit score and public records. Lenders must confirm the Declarations in GUS and/or the loan application are completed accurately.”

How long do you have to wait to qualify for a USDA loan after a short sale?

Approved Florida USDA lenderUSDA guidelines further state that a “short sale closed 36 months prior to the date of loan application is not adverse credit.”

One exception to the 36 month rule is when you obtain an ACCEPT response through the USDA Guaranteed Underwriting System (GUS).  When you are able to obtain this automated acceptance, then no credit exception is required for waiting periods less than 3 years (36 months)

However, if your file receives a GUS response of Refer, Refer with Caution, or for those manually underwritten loan files, “a credit exception is required when the applicant has a short sale closed 36 months prior to loan application.”

As a USDA approved lender, we utilize and have access to the GUS underwriting system which allows us the ability to review the findings upfront and help determine your eligibility.

Can you qualify for a USDA loan after a short sale that was due to a divorce?

 USDA guidelines address these situations with the following guidance:

“An applicant that has a short sale closed post-divorce/recorded legal separation agreement and the home was awarded to the ex-spouse/remaining party may document the loan was paid as agreed prior to date of divorce decree/legal separation agreement. The payment history on the credit report or other documentation from the loan servicer/lender may be retained to confirm eligibility.”

In summary, USDA guidelines now permit more flexibility and depending on the circumstances, it can be possible to qualify for a USDA loan after a short sale sooner than you think!

Please remember that credit scores do not guarantee approval and minimum credit conditions will apply.

Remember, not all lenders have experience with processing and closing USDA loans. Metroplex Mortgage Services is an approved USDA lender, and we are known for our program expertise and have specific systems in place to process USDA loans from pre-qualification to closing.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference.

800-806-9836 Ext. 280
SeanS@MPLX.org

As always, I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!

P.S. To see all waiting periods for each loan type, feel free you can download our complimentary loan comparison chart here.

Short Sale waiting periods

Here's What to do if your USDA Loan is Denied in FloridaWhat happens if a USDA loan is denied after the contract is signed? Well, before your blood pressure starts to rise, remember that there are multiple ways a USDA loan can be approved.

In today’s short video, we’ll discuss the USDA approval process and how to keep your transaction heading in the right direction… even if your USDA loan gets initially denied.

Before clicking the play button, please download our free USDA Blueprint for Success. This resource is a great education tool designed for both homebuyers and realtors.

What happens if your USDA Loan is Denied?

Tampa FL USDA Approved Lender ListIf your USDA loan is denied, don’t panic. There are multiple ways a USDA loan can be approved. So, take a deep breath and I’ll walk you through the options.

There are two different ways a USDA loan can be approved: 

  1. Automated Underwriting – acceptance through the USDA underwriting system known as GUS  (Guaranteed Underwriting System)
  2. Manual Underwriting For those files that receive a “Refer” or “Refer with Caution” response from GUS or any other factor that requires a downgrade.

Automated vs Manual Underwriting

Automated underwriting acceptance is like driving down a smoothly paved road with great weather and no traffic. Whereas, manual underwriting is like traveling down a bumpy road in bad weather. They both get you to the destination, but one may require additional care and steps to navigate.

Automated acceptance  will permit a more streamlined approval process and reduced underwriting documentation. Whereas, manual underwriting guidelines are more stringent, but also provide more flexibility for things such as credit exceptions.

Depending on your bank or lender they may only work with automated approvals.

Steps after Denial

If you have been denied a USDA loan your next steps are to…

  1. Ask if the lender is able to process under manual underwriting guidelines.
  2. Check to see if you are working with an actual approved USDA lender.

2017 #1 Top ranked Florida USDA lender

If you are not working directly with a USDA approved lender, then the bank, broker, credit union, or lender is the “middle man” working with the approved USDA lender. This often leads to delays or miscommunication.

As an approved USDA lender, we are experienced in working with USDA guidelines for both manual and automated approvals. Plus, we have specific systems in place for USDA processing that cover everything from pre-qualification to closing.

Remember, let our experience be a resource for you. Whether it be USDA, VA, FHA, or Conventional, simply call or email to discuss your scenario and let us show you the “Metroplex” difference!

(800) 806-9836 Ext. 280
SeanS@MPLX.org

Can a USDA Loan be Used to Buy a New Construction Home in Florida?Remember that while new construction homes can be available in suburban communities, rural areas are also experiencing a high demand for those new construction properties!

However, buying a home in a rural area may hold a distinct advantage because a USDA No Down Payment loan can be used to buy a new construction home in an eligible area!

In today’s video, I will share how a new construction home can be financed with a USDA loan and explain the different ways a USDA loan can be used to buy a new construction home.

Plus, before we get started, please download our USDA Blueprint for Success. This free guide is designed to walk you through the USDA process step-by-step and is a great tool for both homebuyers and realtors alike.

USDA New Construction Homes

As a starting point, USDA guidelines defines a new dwelling as:

  • one that is “under construction” to be built
  • or a “dwelling that is less than one year old and has never been occupied”

Next, the type of loan needed will determine how we structure the USDA financing:

  • USDA Construction to Permanent Loan (also called USDA Single-Close): This feature can be utilized where an approved builder does not have their own funding and they need you to close on a construction loan upfront in the process. This then allows them to receive loan draws in order to build your home.
  • USDA New Construction Loan – “End Loan”:  This type of financing does not provide loan draws to the builder.  Many refer to this as an “end loan” because it would be used to pay off any construction loan that the builder may have taken out to finance the construction of the property.

In an “end loan” scenario, the builder is able to fund the construction of the property whereby Metroplex would then be responsible for establishing the permanent residential USDA mortgage at closing after the home has been completed.

Today’s topic will focus on end loan financing. In this scenario, you will see how a USDA no down payment loan can be used to buy a new construction home.

USDA 100% Financing – New Construction Homes

Can a USDA Loan be Used to Buy a New Construction Home in Florida?

In some cases, a builder has their own funding sources set up and does not want to go through an approval process as required under the USDA Construction to Permanent Loan.

Instead, the builder completes the construction of the home with their own funds and then receive their construction proceeds at the time of closing.

In this situation, many times loan qualifying has been started months prior to the completion of the home. Plus, it requires the lender to be diligent about monitoring the expiration dates of the appraisal, along with the borrower’s income, assets, credit, and employment.

However, because of our proven track record and being a top-ranked USDA lender, we have established procedures in place to monitor the loan file. Making us as proactive as possible during the construction period.

Additionally, if a builder has a spec home that is under construction and a buyer contracts with them to build the home, the USDA Construction to Permanent Loan would not be available since the home has already been partially constructed.  In this scenario, the builder will complete the construction and then receive payment at closing as discussed above.

Buy a New Construction Home with a USDA loan

As you can see, a USDA loan can be used to buy a new construction home!

In this case, it’s vital to know how the financing of the new home build is structured.  This determines the type of USDA loan funding and when those funds are available.

A USDA Construction to Permanent Loan is used to close on a construction loan in order to receive draws to build the home. On the other hand, if the builder has their own financing, it allows you to wait until closing for your USDA new construction loan to be established.

Please note that everyone’s situation is unique such as a fingerprint, so please reach out to my team for any specific questions.

Remember, we are known for our USDA loan expertise – Just call or email to discuss your scenario and let us show you the “Metroplex” difference.

800-806-9836 Ext. 280
SeanS@MPLX.org

I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!

P.S. – You can download our FREE “USDA Blueprint for Success” by CLICKING HERE.

Can a USDA Loan be Used to Buy a New Construction Home in Florida?

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