How can you take advantage of lower interest rates and reduce your monthly payments when you have a USDA mortgage? USDA loans can be refinanced with the USDA Streamlined-Assist Refinance program and one of the best features is that it does not require an appraisal! In today’s video, I’ll review the qualifying details associated with the USDA Streamline-Assist Refinance program.
As an approved USDA lender, we take price in our USDA experience and would like to share that knowledge with you through our FREE USDA guides and fact sheets. These are available to help both homebuyers and Realtors understand the USDA process. You can download them all here!
USDA Streamline Assist Refinance
The USDA Streamline-Assist Refinance program is a 30-year fixed-rate program that allows homeowners with an existing USDA mortgage to take advantage of lower interest rates. Thankfully, there is no appraisal required during this process and no prepayment penalties.
In order to qualify for a USDA Streamline Assist Refinance the following conditions must be met:
- You have an existing USDA mortgage.
- No late payments within the past 12 payment. This would be considered anything that is reported as a 30-day delinquency.
- The total family household income must meet the current USDA income eligibility requirement.
How Much Does it Cost?
As a starting point, appraisal or inspection fees are not required. Plus, the USDA Streamlined Assist Refinance program allows you to finance eligible closing costs which is able to save money on out-of-pocket expenses.
Furthermore, we at Metroplex do not charge application fees!
Are You Ready to Refinance your USDA mortgage?
The USDA Streamline Assist Refinance program helps reduce a homeowner’s interest rate and monthly payment without the need for an appraisal. Plus, as a USDA approved lender we have the expertise and experience to aid you in each step of the process.
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!
In order to maximize your USDA sales price, calculating all available income is critical!
However, because everyone is not paid the same, it is also important to understand the most recent and updated qualifying guidelines used for calculating USDA overtime income, bonuses, and commissions.
In today’s video, I’ll show you how to make the most out of your USDA loan qualification by reviewing the improved and increased flexibility provided for these types of income sources.
Plus, if you are ready to take the next step towards learning the USDA qualifying process, download our USDA Blueprint for Success FREE report which is designed to give you an overview of the USDA Home Loan process, eligibility requirements, and much more. Download it now!
UPDATE – Improved Qualifying for USDA Overtime Income, Bonuses, and Commissions
1. USDA Income Guidelines
As a quick review, USDA guidelines group income into two categories:
- Annual income is used when calculating USDA Income Eligibility Limits.
- Repayment income is used to calculate debt ratios and the USDA maximum qualifying loan amount.
As for the income that can be used for determining your loan qualification, USDA provides qualifying flexibility for the following different types of income sources:
The good news is that these requirements have recently changed and are now greatly improved!
2. New Guidelines for USDA Overtime Income, Bonuses, and Commissions
USDA previously required a two-year history for income that was earned from overtime, bonuses, and commissions.
However, updated USDA guidelines now only require a one-year history for us to count this income towards your USDA qualifying sales price!
While it is ideal that these types of earnings are from the same place of employment, this is not required either.
Additionally, while the continuance of this type of income will be presumed unless there is documented evidence that the income will cease, USDA guidelines will require that:
“Underwriters must analyze overtime for the current pay period and YTD earnings. Significant variances (increase or decrease) of 20 percent or greater in income from the previous 12 months must be analyzed and documented before considering the income stable and dependable.”
3. How do you calculate USDA qualifying income?
Most of all, don’t be caught up in calculation confusion! Let our USDA expertise, efficiency, and program knowledge work for you!
Remember, we are known for our communication and are just a phone call away!
Either call (800) 806-9836 Ext 280 or email SeanS@MPLX.org so we can help identify and properly calculate USDA overtime income, bonuses, or commissions.
In fact, my team and I are built to help walk homebuyers through the USDA process step by step. That is why we take pride in offering several important USDA Free Resources which include important tips, guidelines, and proper qualifying steps.
In rural areas, what can be done when a seller wants to include their adjoining vacant lot as part of the same sale? Thankfully, USDA loans can be flexible when trying to include an adjoining parcel.
However, it’s important to be aware of 5 critical points when working to purchase a home and the vacant lot next door with a USDA loan.
In today’s video, I’ll explain how a USDA loan can help you buy the vacant lot next door and include it as part of a single transaction. This is specific to a USDA loan since other loan programs have their own unique requirements.
For a great overview of mortgage loan options side by side, download our FREE Loan Comparison Sheet here!
How do you purchase the adjoining vacant lot with the same USDA loan?
USDA guidelines offer improved flexibility when attempting to purchase and include the vacant lot next door within the same USDA loan.
While this is not a comprehensive list, below are 5 critical points to remember when purchasing a home and financing the adjoining vacant lot with the same USDA loan.
- Lots must be adjoining (connected)
- If the lots have not yet been combined, remember to separately list each parcel ID on the same sales contract
- The appraiser will include all parcels in the value
- Lot must meet USDA site requirements:
- be typical for the area
- be predominantly residential in use, character and appearance.
- the property must NOT include buildings principally used for income-producing purposes
- All lots will need to be included with the final survey
Summary – How to include a vacant lot next door with a USDA loan?
Remember that when trying to include the adjoining vacant lot with the same transaction, guidelines will vary between loan programs as well as between lenders, so upfront communication is critical prior to signing a sales contract.
Let our vast experience and expertise with complicated situations go to work for you.
Please reach out by calling (800)806-9836 Ext. 280 or emailing SeanS@MPLX.org
We are here to help you in each step of the mortgage process!
Lastly, don’t forget to discover all of our FREE USDA Resources.
Make it a great day and I look forward to seeing you for the next tip of the week!
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.”
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
In 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!
It is possible to qualify for a USDA loan with little or no credit history?
When a homebuyer does not have an established credit history, USDA qualifications allow the ability to utilize non-traditional credit accounts.
In today’s video, I’ll discuss qualifying options that are available for those with limited or no history reporting to any of the credit bureaus. This allows for increased qualifying flexibility… that’s a USDA staple!
You can learn all about USDA eligibility in our FREE download USDA Blueprint to Success. This educational download will show you the USDA process from qualifying to closing.
Traditional vs Non-Traditional Credit
Traditional credit refers to companies that typically report their accounts to credit bureaus like Experian, TransUnion, and Equifax. For USDA qualification these traditional credit reference may include:
- Auto loan(s)
- Credit card(s)
However, sources which do not report to credit bureaus are classified as non-traditional credit. These alternative credit sources may include:
- Electric bill
- Water bill
- Phone bill
- Rental payments through either a management company or canceled checks to a private landlord
Overall, USDA guidelines require that there are at least two eligible tradelines (accounts) on the credit report with at least 12 months of repayment history. This is to be reviewed as part of their minimum credit reputation requirement.
However, when a potential home buyer does not have traditional credit there are still non-traditional credit accounts that can be used for USDA eligibility. These alternative credit sources help establish their ability to qualify and repay the loan.
For those buyers who have limited or no credit history USDA qualifications require the following when using non-traditional credit to qualify:
- Two trade references are required when at least one of the trade references includes verification of rental housing payments or mortgage loan payments.
- If unavailable, at least three trade references must be used to determine if an applicant has a sufficient credit history.
Once we are able to determine which eligible recent accounts are to be verified, payment histories will be reviewed in order to determine their eligibility towards USDA qualifications.
Minimum Credit Conditions Will Apply
Remember, it is possible to meet USDA qualifications with little or no credit history. However, minimum credit conditions will apply and non-traditional credit may not be used to substitute for negative credit.
We understand that qualifying for a USDA Loan may seem difficult and overwhelming, but that is why my team and I are here to help! As an approved USDA lender, we can maximize the potential of this unique program and open the door to homeownership.
Keep us in mind for your next pre-qualification or if you have a current USDA loan in progress and need an expert 2nd opinion. Just call or email to discuss your scenario and let us show you the “Metroplex“ difference!
Toll-Free: (800)806-9836 Ext. 280
Plus, don’t forget to download our FREE USDA Blueprint for Success. Go make it a great day and I look forward to seeing you for next’s week quick tip!
USDA property eligibility is a must know, but many times it’s easier to know what causes a property to be ineligible.
In today’s video I will explain what property types are NOT eligible for a USDA loan and help keep your USDA property search headed in the right direction!
USDA Property Eligibility
USDA guidelines specify that the property being purchased must be located in a USDA eligible area.
Also, general USDA guidelines state that “a qualified property must be predominately residential in use, character, and design” which means that the following criteria can cause a USDA property to be ineligible:
1. Income-Producing Property
USDA guidelines state that the “purchase or improvement of income-producing land or buildings that will be used principally/specifically for income producing purposes is not allowed. Vacant land or properties for agricultural,
farming or commercial enterprise are ineligible.”
However, “minimal income-producing activity, such as maintaining a garden that generates a small amount of additional
income, does not violate this requirement.”
2. Income-Producing Buildings
USDA property eligibility requirements do not permit income-producing buildings on the land.
“The property must not include buildings principally used for income-producing purposes. Barns, silos, commercial greenhouses, or livestock facilities used primarily for the production of agricultural, farming or commercial enterprise are ineligible.”
With that being said, there are a few exceptions that still qualify for USDA property eligibility under this category:
- Barns, silos, livestock facilities, and greenhouses are allowed if used for storage and no longer used for a commercial operation.
- Storage sheds, workshops, and other non-commercial outbuildings are permitted if they are not used primarily to produce income.
What about Property Size?
Often times, USDA property eligibility is thought to be determined by the size of the land, but this is not true. In fact, USDA loans do not have a limit on acreage provided the property is similar in size to properties in the area.
“There is no specific limitation to the size/acreage of the site. The appraiser must provide an explanation in the addendum of the appraisal to explain adjustments to comparable properties, how the subject compares to other properties in the area, etc.”
As a USDA Approved Lender in Florida, Texas, Tennessee, and Alabama, we are known for our expertise in USDA property eligibility. We are able to maximize the full potential of a USDA loan within the rural communities that we serve.
As always, make it a great day and I look forward to seeing you on the next USDA Loan Pro tip of the week!
As a USDA and VA approved lender, one of the most common questions I receive is, “What are the differences between USDA and VA loan?”. Both USDA and VA loans are great no down payment mortgage options. However, it’s vital that you know the differences in their eligibility, if PMI applies, and the different benefits for each program.
USDA and VA loans provide fantastic financing options and mortgage qualifying flexibility. On the other hand, their unique features and eligibility requirements are a must-know for home buyers and realtors. In today’s video, I’ll review the big differences between USDA and VA loans.
Plus, download our FREE Loan Comparison chart and see the features of USDA, VA, FHA, and Conventional Loans compared to each other in one simple chart. In it, you’ll discover maximum financing amounts, fees, waiting periods and more. Download it now!
No Down Payment USDA and VA Loans
USDA and VA loans are known for their no down payment mortgage and flexible credit qualifying. Credit flexibility is added by:
- Reduced minimum scores; and
- Manual underwriting availability; and
- Reduced time frames for recent bankruptcies, foreclosures, and short sales.
Please note, minimum credit conditions still apply.
When compared to each other, USDA and VA loans have very different eligibility criteria. Let’s review those requirements now.
USDA guidelines specify that applicants must meet household income limits as outlined per county. In addition, the property being purchased must be located in a USDA eligible area.
Do USDA or VA loans have PMI?
USDA loans do not technically have Private Mortgage Insurance (PMI), but they do have an annual fee. This annual fee is calculated on a monthly basis and is included with your mortgage payment.
Furthermore, there is also a one-time charge based on a 1% Guarantee fee. This charge is collected at closing and may be financed into the loan.
VA loans do not have PMI or any monthly charges. However, there is a one-time VA Funding Fee that is collected at closing and may be financed into the loan.
The VA Funding Fee ranges between 0% to 3.6% and was just updated as of 1/2/2020. It is calculated based on:
- The type of service,
- Previous usage,
- Purchase or refinance,
- And if there was any down payment made.
The funding fee is waived for certain Veterans with a service-connected disability. The surviving spouse of a Veteran may also have their funding fee waived if certain eligibility criteria are met.
If you find this all a bit confusing, feel free to download our Loan Comparison Chart. This chart shows the financing amounts, fees, waiting periods and more for USDA, VA, FHA, and Conventional Loans. You can download it here!
Who can help you qualify for a no down payment mortgage?
Remember, USDA and VA loans are great no down payment mortgage options. Plus, as an approved USDA and VA lender we offer in-house underwriting for both of these valuable programs.
The Metroplex team takes great pride in serving both our military and rural communities.
In addition, our experience has led to expertise in the following areas:
- VA Certificate of Eligibility,
- Calculating the VA entitlement,
- Reviewing eligible USDA areas and property types,
- Determine USDA income eligibility,
- And much more!
Don’t forget, if you need any help or have questions please call (800) 806-9836 Ext. 280 or email SeanS@MPLX.org. We are your resource for ALL loan types, so let us show you the “Metroplex” difference!
Typically, when purchasing a home, a buyer will have two types of out-of-pocket expenses: down payment and settlement charges.
With a USDA no down payment loan, the burden of a down payment is eliminated. However, remember that no down payment is not the same as “no money out-of-pocket“, because other costs may still apply such as an earnest money deposit, appraisal fees, inspections, closing costs, and pre-paid items.
In today’s’ video I will review customary out of pocket costs which includes details on any requirements for the earnest money deposit (EMD).
Have you viewed any of our FREE USDA resources? Whether you download our USDA Blueprint for Success or our Guide to USDA Financing for New Construction your knowledge will grow about the USDA qualifying process!
What is an Earnest Money Deposit (EMD)?
Earnest money is a deposit on the house you want to buy. It is used to show sellers that you are serious about buying their home and it is a good-faith gesture towards the purchase.
USDA Loans and an Earnest Money Deposit
While no down payment USDA loans do not require an earnest money deposit, it is customary for a buyer and seller to agree upon an EMD. Plus, as part of the approval process, the deposit will need to be verified.
Additionally, if any funds are owed by the buyer at the time of closing, the Earnest Money Deposit will be credited towards that amount.
Can you get your earnest money deposit back?
At the closing of a USDA loan, it’s possible to receive all or a portion of the EMD back, but it’s not guaranteed. Return of any EMD is dependent on the appraisal of the home or if the seller is paying any of the buyer’s settlement charges.
Other Possible USDA Out-0f-Pocket Expenses
- Appraisal Fees and Inspections
- Appraisal fees and inspections are customary out of pocket expenses. They should be paid for by check or credit card when the option is available. Both forms of payments will allow for verification if needed.
- Closing Costs and Pre-Paid Items
- These can be financed through a USDA loan only when the appraisal is high enough to allow for the increased loan amount.
- Buyers can attempt to negotiate with the seller to pay towards their closing costs to help reduce this expense, but this depends on what amount the seller is willing to negotiate.
USDA loans offer no down payment financing, but that is not the same as no money out-of-pocket! We have reviewed all the possible out-of-pocket expenses and you can see that the details are vital to the success of the purchase. As an approved USDA lender, our expertise allows us to help home buyers make the most of their qualifying ability.
Do you have any questions? Just call (800) 806-9836 Ext. 280 or email SeanS@MPLX.org to discuss your scenario. We are excited to show you the “Metroplex” difference!
Feel free to download any of our USDA free resources and make it a great day!
When purchasing a home, you never want to be surprised with out-of-pocket expenses. Remember, even when purchasing with a USDA No Down Payment Loan, you still have to be prepared for other costs to complete the transaction which include Florida Intangible Tax and Transfer Tax. In today’s video, I will go over the details and explain how these costs are calculated so you can be prepared!
Florida Documentary Stamp Tax
The State of Florida can assess certain taxes on both the transfer of real property and mortgages. Thus, a Florida home buyer must pay additional taxes when purchasing a home.
A number of these taxes stem from Florida’s documentary stamp tax. Below is what the Florida Department of Revenue states the documentary stamp tax is:
“Documentary stamp tax is an excise tax imposed on certain documents executed, delivered, or recorded in Florida. The most common examples are:
- documents that transfer an interest in Florida real property, such as deeds; and
- written obligations to pay money, such as promissory notes and mortgages.
Tax is paid to the Clerk of Court when the document is recorded. When a taxable document is not recorded, the tax must be paid directly to the Florida Department of Revenue.” (Chapter 201, Florida Statutes)
Deeds and other documents that transfer an interest in Florida real property are subject to documentary stamp tax.”
So what does all this mean? Basically, Florida taxes are administered to cover the variety of recorded documentation needed when purchasing a home.
Calculating the Florida Transfer Tax
According to the Documentary Stamp Tax, when transferring a property deed the Florida Transfer Tax would be calculated by taking 70 cents for each $100 or fractional part. (Florida Statute §Section 201.02(1)(a)) Please note, that the tax rate of .70 cents is applicable in all counties except Miami-Dade.
Furthermore, a promissory note is the document that details the amount owed, interest rate, and the terms of your promise to repay. The state assesses a tax of $.35 cents per $100 of the face value of any promissory note. (Florida Statue § 201.08(1)(b))
Calculating the Florida Intangible Tax
Lastly, there is a one-time nonrecurring tax commonly referred to as the Florida Intangible Tax. This tax is calculated at 2 mills per each dollar amount of the note ($.002) secured by the mortgage. (§199.133, Fla. Stat.)
If you are overwhelmed at this point, don’t worry. I’ll go over an example calculation and it will become clear how these taxes are applied. Here’s the situation:
Brenda, the seller, and Steve, the buyer, have agreed to the purchase and sale of a property located in Highlands County for $125,000. After Steve’s down payment of $25,000, he obtained a promissory note for $100,000 secured by a mortgage.
Now, because the sales price is $125,000, the Florida Transfer Tax calculation on the deed would be:
- $125,000 X .0070 = $875.00 (1,250 taxable units X $.70)
Further, because there is a promissory note for $100,000 the following Transfer Tax would also be calculated:
- $100,000 X .0035 = $350 (Promissory Note)
Lastly, because of the Florida Intangible Tax, the following is also calculated:
- $100,000 X .0020 = $200 (Intangible Tax)
In total, this amounts to a potential Florida tax charge of $1,425. Now, you can see how these costs can sneak up on you. Just remember, the terms of the sales contract will usually determine who is responsible for each specific cost.
Buyer Closing Costs in Florida
A buyer’s closing costs in Florida may vary from transaction to transaction. Please use us as your resource for any further questions. please please call (800) 806-9836 Ext. 280 or email SeanS@MPLX.org to discuss your scenario. We are known for returning calls, replying to emails, and responding to your messages.
Make it a great week, download some of our FREE resources below, and I’ll see you next time!
What are the required distances for well and septic on USDA and FHA loans?
Understanding USDA and FHA loan distance requirements between a well and septic are critical when determining eligibility and because it can be common for rural properties to have a well and septic, our topic today discusses the important measurements that need to be accounted for when determining minimum property eligibility for both USDA and FHA loans.
In today’s video, I’ll share the USDA and FHA distance requirements for wells and septic. Watch below and then download our FREE guide USDA Blueprint for Success. Our Blueprint is designed to walk you through the USDA process step-by-step!
USDA and FHA Loans Share the Same Well and Septic Distance Requirements
USDA loans follow FHA HUD Handbook guidelines. This means that USDA and FHA loans share minimum property requirements including the distance requirements for properties with a well and septic.
Below, are the HUD Handbook minimum distance requirements for existing properties with wells and sources of pollution. Please note, the following requirements are for existing properties and not for new construction homes or those on a public water system.
USDA and FHA Well and Septic Distance Requirements:
- A well or septic must be a minimum of 10 feet from the property line.
- A well must be a minimum of 50 feet from septic.
- A well must be a minimum of 100 feet from the drain field.
- The distance may be reduced to 75 feet if allowed by the local authority.
- 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.
Be Aware of Well and Septic
Be aware that distances for well and septic are not customarily calculated until the sales contract is received and the loan application is in process.
Thus, letting us know of any concerns upfront is important for success. Please call (800) 806-9836 Ext. 280 or email SeanS@MPLX.org if you have any concerns so we can review your case and advise.
Don’t let the USDA and FHA distance requirements for well and septic overwhelm you… that’s what we are here for! While properties with wells and septic do have extra steps, our expertise is here to help open the door to homeownership!