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USDA RURAL DEVELOPMENT

USDA RURAL DEVELOPMENT. WHAT IS RURAL DEVELOMENT?. Census-based US Department of Agriculture Guaranteed against loss by USDA Pays lender if borrower defaults. WHO CAN DO USDA LOANS?. Approved lender with HUD, VA, Fannie Mae or Freddie Mac State Housing Agency Farm Credit Service.

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USDA RURAL DEVELOPMENT

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  1. USDA RURAL DEVELOPMENT

  2. WHAT IS RURAL DEVELOMENT? • Census-based • US Department of Agriculture • Guaranteed against loss by USDA • Pays lender if borrower defaults

  3. WHO CAN DO USDA LOANS? • Approved lender with HUD, VA, Fannie Mae or Freddie Mac • State Housing Agency • Farm Credit Service

  4. IT’S THE GOVERNMENT! • Pays for itself – doesn’t use taxpayer money • Funded through the 2% Funding Fee (which can be financed into the loan!)

  5. LOAN PURPOSE • Purchase new construction • Purchase existing home • Refinance (only if currently have a direct Rural-Development Loan) • Purchase Mobile Home (very limited; difficult)

  6. REASONS TO NOT USE RURAL DEVELOPMENT FOR A BUYER • Geographical Limitations • Maximum Income limitations • Can’t buy house with in-ground pool (can try for exception to this) • Primary Home Only

  7. INCOME QUALIFICATIONS • Household adjusted annual income cap uses ALL occupants whether on the loan or not, that are 18 and over • Counts gross income, overtime, commission, bonuses, net self-employment income, Social Security, Child Support, unemployment, etc. • Based on family size & county where property is located • http://eligibility.sc.egov.usda.gov

  8. ADJUSTMENTS TO INCOME • $480/Year per minor or full-time student • Verified child care expenses • $400/Year if borrower or co-borrower is over 62 or disabled

  9. * Broward, Pinellas and Monroe are NOT eligible

  10. GEOGRAPHICAL QUALIFICATIONS • ALL of Walton County • Destin • Niceville • Valparaiso • Crestview • West of Hurlburt in Okaloosa County • ALL of Santa Rosa County

  11. GEOGRAPHICAL LIMITATIONS FT. WALTON BEACH & SHALIMAR DO NOT QUALIFY

  12. BENEFITS TO BUYERS • Can finance 102% of appraised value, without getting cash back at closing (can get EMD, but no more) • No Monthly Mortgage Insurance • 30-Year fixed rate with very competitive rates • No loan limits (DTI/income limitations) • Closing costs can be financed • Unlimited gift or seller contributions • No reserves required

  13. Sales Price: Appraisal: Seller Paying:EMD:Closing/Prepaids2% Funding Fee: $100,000 $110,000 $0 Closing Costs $500 $3,000/$2,000 $2,000 Can Finance: $107,000 and get $500 EMD back

  14. Sales Price:Appraisal:Seller Paying:EMD:2% Funding Fee: $100,000 $105,000 ALL Closing/Ppds. $500 $2,000 Can Finance: $102,000 and get $500 EMD back

  15. QUALIFYING • Debt to Income Ratios = 29/41 • Debt to Income Ratios = 31/43 (for homes built after January, 2001) • Can go higher on DTI w/compensating factors: • 660+ Credit Score • Zero or very little payment shock • 2+ years continuous employment at same job • Rental/Housing history for 12 months required if credit score 619 or less (cancelled checks); if 620 or higher, not required

  16. OTHER CRITERIA • Do not own a dwelling currently • Lack sufficient resources to secure conventional credit • US Citizen, Permanent Resident, Resident Alien, or Qualified Alien • Have legal capacity to enter contract • Primary Residences Only

  17. PROPERTY ELIGIBLITY • Must have access from a street, road or driveway • Site value less than or equal to 30% of total value • Leasehold estates (where applicable)

  18. OTHER PROPERTY REQUIREMENTS • If on a well & septic, must be tested and meet county requirements • Pest inspection required – deficiencies must be corrected • Escrow for repairs under certain limited circumstances and will be 150% of cost • New construction – must have warranty

  19. FUNDS AVAILABLE • RD has annual amount of funds appropriated by Congress • Funds must be reserved by the lender but can’t be until there is a fully-executed sales contract • Reservation is valid for 60 days • Have been known to run out before end of fiscal year

  20. QUESTIONS?

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