Below is information about USDA financing for Bargersville IN Real Estate as well as some other Rural areas,
USDA financing is a great way to help your buyers find a home with limited cash out of pocket because it is 100% financing, truly the only type of no down payment loan left for non-veterans. The United States Department of Agriculture makes Guaranteed Rural Housing loans available to persons buying homes in areas considered to be rural. You can check a property's eligibility at this website http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
The areas considered to be rural by this program may surprise you. There are even some areas where new homes are being built that qualify for 100% financing under this program. There are income limitations that are calculated by the median income per county. This information is available at the above site as well.
The basic requirements set forth by the USDA for a buyer to qualify for these loans states "The Guaranteed Rural Housing mortgage loan program offers 30-year fixed-rate mortgage financing guaranteed by the U.S. government through USDA Rural Development (RD). Applicants must "be unable to secure a conventional loan without a Rural Development guarantee upon terms and conditions which the applicant could reasonably be expected to fulfill." Under this definition, a conventional loan is one in which the borrower: 1) is able to put 20% down, 2) is able to pay all closing costs and prepaid expenses out-of-pocket, 3) has debt ratios at or below 28%/36%, and 4) has reasonably good credit."
Recently, all funds for this program had been exhausted, pending new funds to be approved by Congress. Just a few days ago, I received notification that one of my lenders is now accepting registrations for USDA loans because $25 million has been released for this program.
The basic requirements set forth by the lender are as follows:
660 minimum median FICO for all borrowers
Maximum of 50% DTI, some compensating factors may be considered on a case by case basis
3.5% guarantee fee paid to RD (financed or paid out of pocket similar to FHA MIP)
Escrow for homeowner's insurance and property taxes
No monthly MI
No reserves are required
All household income is considered in the income limits
Gifts are allowed for payment of closing costs and other pre-paid items
No limit on interested party contributions
Must have clear CAIVRS, no delinquent federal debt
Appraiser must be on the FHA roster and on the lender's approved appraiser list
Land associated with the purchase cannot exceed 30% of the total value
Well/Septic/Pest Inspection requirements similar to FHA
No in-ground pools allowed without a waiver approved by the underwriter
Any repairs required by the appraisal have to be completed prior to closing, no repair escrows allowed
Other property specific restrictions apply, but most residential transactions will qualify
Federal judgments must be satisfied
Student loans regardless of deferral status will be counted in the total debt
Collections may not need to be paid in full, they will be considered on a case by case basis
These loans are always 30 year fixed rate mortgages. Interest rates are comparable to FHA rates. The typical buyer that would qualify for this type of loan is one with a credit score of less than 720, and that does not have 20% to put down for a conventional loan. The main benefit to your buyer if they are currently looking at FHA financing is that there is no required down payment and no monthly mortgage insurance premium. Also, if your buyer is receiving a gift to pay any closing costs or other items, they will not need to have any reserves at closing.
Typical closing costs include an appraisal, credit report, title and recording fees, and lender fees, which are all comparable in nature and amounts to fees associated with an FHA loan. Since there is no limit to interested party contributions, purchase prices can be negotiated, and as long as the appraised value will support it, to allow for the seller to pay all closing costs, prepaid items and lender fees.
In order to pre-qualify your buyer for this program, they will need to submit the following items for review:
30 days most recent consecutive paystubs
2008 and 2009 W2s (self employed borrowers have additional requirements)
Any other household income information such as child support, SSI, and retirement income
Copy of photo ID and SS card
Because of limited funds available presently, quick action is needed to secure these funds for your buyers.
Info provided by:
Elizabeth Henson
Feel free to contact me with any questions or guidance regarding this program.
Elizabeth.henson@royalunitedmortgage.com
(317)664-7932
NMLS #198733
