Thank you. George Souto for the update on USDA. Note to my Texas Buyers: George is not licensed in Texas, however the information below still applies and you can click on the USDA link to check to see if a specific address is in a qualifying area. Give me a call at 936-650-9017 if you need help finding a TEXAS lender that does USDA loans.
There have been a few changes to the USDA/Rural Mortgage Program since the last program guideline description I did two years ago, so the purpose of the blog is to provide an updated program description of the USDA/Rural Mortgage Program Guidelines.
The three major changes to the USDA/Rural Mortgage Program are:
- Previously USDA/Rural did not allow for properties to have in-ground pools, now they do
- Previously USDA/Rural did not allow for properties to have barns, now they do. This one always struck me as odd since the USDA/Rural is the old Farmers Loan Program
- Previously the PMI was .40 factor and now it is a .50 factor, and just like FHA it is on the mortgage life time
The USDA/Rural is an excellent loan program especially for First Time Homebuyers, because it is a true no money down 100% fiance loan program. The USDA/Rural Mortgage Program is restricted to rural areas, and has income limits, but for Borrowers and properties that qualify, it is a great way to purchase a home and only have to pay closing costs.
However, even closing costs can be finance when the USDA/Rural Mortgage Program is combined with a Connecticut Housing Finance Authority (CHFA) Mortgage Program or with another Stated Bonded Mortgage Program. Sellers are also allowed to contribute to the Borrowers closing up to 4% of the selling price. With either of these options a Borrower can purchase a home with a USDA/Rural Mortgage program with little or no money out of pocket.
Below is an updated overview of the USDA/Rural Mortgage Program Guidelines.
USDA/Rural Guarantee FEE & Monthly MI
USDA allows a Borrower to Borrow:
- Up to 102% Loan To Value (LTV).
- Can role in Closing Costs & Repairs if it can be supported by the appraisal.
- Does not have a maximum purchase price (unless combined with the CHFA Mortgage Program).
- .50 Monthly Mortgage Insurance (PMI) lifetime of the loan.
- Qualifying Ratio's are 29/41 and above with a Ratio Waiver.
- Minimum 620 middle Credit Score, but some Lenders may require a 660 middle Credit Score.
Properties that are eligible for USDA loans are:
- Existing homes
- 1/2 of a duplex
- Modular homes
- New construction.
- New manufactured homes built to HUD Code.
Even though USDA does not have Sale Price Limits, it does have Income Limits by household size, and they may differ from County to County and State to State. Income Limits Include:
- ALL household income.
- Seasonal/Overtime/Bonus income may be averaged based on verified history.
- Pending pay increases may be used as a compensating factor.
- If total assets >$5000, must include the interest income as part of the
income eligibility calculation
USDA Appraisals: USDA requires appraisals to be done by an FHA approved Appraiser and follow FHA appraisal requirements.
Info about the author:
George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or firstname.lastname@example.org
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