Tuesday, August 12, 2008

102% LTV Government Guarantee Mortgage

I just came from a training class on a mortgage product I was totally unaware of. It is the USDA Rural Development Loan. Wow, those of you that follow my blog know that I am an advocate for the FHA Mortgage. It is a great loan and always has been.

But this loan product I have to say is better than the FHA program. The USDA Rural Development program is focused right on median income families. Here are some of the highlights:

  • Funding up to 100% of the APPRAISED Value, not purchase price, or 102% if financing the 2% guarantee fee.
  • There is no private mortgage insurance. (this is a big deal)
  • Purchase loans only
  • Flexible credit guidelines and income ratios
  • There are income and property location restrictions.
  • no reserves required
  • no maximum seller concessions or gifts

Income restrictions mean if you make too much money you can't have one of these loans. Yes there is a debt ratio standard and that is 29/41 or if the home was built to 2000 energy code that can go to 31/43.

Property restrictions are based on location. This is a rural development program so as you can imagine, homes in large cities don't qualify.

The credit guidelines flexibility is totally unreal. If you have a credit score higher than 620, trade line information is irrelevant and not considered. Yes, that means late pays, collections and judgements. Bankruptcy and foreclosures don't have a timeline if there is a substantial reason.

Another great thing about this loan is that it is not an FHA loan and the lender does not have to be HUD approved. That means a lot of independent brokers now have a terrific loan product, better than an FHA product, they can offer to their customers.

I am really excited about this loan product because after all the mortgage crisis fall out there just are not many options for lower income families. This is a Great program and unless you are a total dead-beat you can still get into a home. The funny thing is this is such a great loan that the majority of home buyers actually have credit scores higher than 620. It's their best option and the interest rates are low!

Oh, these loans are only 30 year fixed rate. This is a hoot, I love it. If you have any questions about it send an email or ask in a comment.

Oh, I almost forgot. If you live in the state of GA there is a lender that specializes in this loan. I recommend you contact Peach State Mortgage for your USDA mortgage. This program is nation wide so contact me and I'll turn you on to the USDA office nearest you.




  1. Who do i contact in Kailua Kona Hawaii.

  2. Marta,

    Contact your local USDA Rural Development office. You do have one there. go to www.rurdev.usda.gov

    Good luck