USDA Direct Home Loan Program Funds

The following News Release is from the Georgia USDA Rural Development State Office. It is about the Direct loan program and it's funding availability.  It is a great program.  Even though this is from Georgia, all states have this program and abundant funding.

News Release

Funds for direct home loan programs available through Sept. 30

Time is running out for Georgia families who want to take advantage of over $21 million in Recovery Act and regular funding to become homeowners in rural Georgia through USDA Rural Development’s direct loan program. Recovery act funds will no longer be available after September 30, 2010.

USDA Rural Development has two home loan programs, the direct and the guaranteed. Direct loans, are made directly by the agency to qualified home buyers. The guaranteed program – which allows the government to partner with local lenders - is so popular that all funds have been exhausted for FY2010. Funds for the guaranteed program should be available on or after Oct. 1 as part of FY2011 funding, but may be available sooner.

The good news about the direct program is not only that funding remains, but that the interest rates will drop to 4.625 percent on July 1, 2010 for a 33 year mortgage.

“This program has very good terms for low and very low families ready to become homeowners,” said Shirley Sherrod, state director of USDA Rural Development. “We want these funds spent in Georgia, so we need people to apply now.”

To qualify, Georgians must have low or very low dependable income; have good credit and debt level to show repayment of the loan. And the houses must be in eligible rural areas.

The low and very low designation is based on Median Household Income for each county, as well as how many people are living in the house. Loans are also for rural areas only, so urban areas are not eligible. To check your income or the house address, visit: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do. Use the panel on the left to navigate.

“We would like to see more applications,” Sherrod said. “We know a lot of people are hurting and there is a lot of fear because of the economy. But this program is designed to protect the families and the mortgage payment is often less than rent. It doesn’t take long to find out if it’s a possibility.”

“We can run a pre-qualification and know pretty quickly whether or not the person will qualify,” said Ed Peace, director of single family housing programs. “We would like to use this money to help Georgia families. But all of these funds will go away on September 30, 2010.”

For Prequalification forms, visit this website http://www.rurdev.usda.gov/ga/SFH-prequal.htm and follow the instructions for faxing the information to our state office for processing.

Once a family becomes a Rural Development homeowner through this program, there are many built in features that can help them become successful, despite life’s ups and downs.

"This program can help with a payment subsidy," Peace said. “If someone loses their job, some payments may be deferred and rolled into the end of the loan. This program is structured to help low income families, who may experience more financial instability.”

Rural Development has offices around the state. To locate the one closest to you, visit http://www.rurdev.usda.gov/ga and go to the Other Information tab and select Office Locator. Offices are open weekdays between 8 a.m. – 4:30 p.m.

"Many people think it isn’t possible. They think they can’t afford it,” Peace said. “But our terms are very reasonable. We will do everything we can to help someone become a successful homeowner if they are really motivated. We can help people that otherwise couldn't get a loan and who would be trapped renting or living with relatives."

Families who have benefited from USDA Rural Development's housing programs include young couples, single parents, older citizens, people on disability, and minority families, among others. In some cases, families who didn’t qualify the first time can often come back and qualify the second or third time. Funds can be used to purchase an existing home or a new one.

“Sometimes people have a credit problem and we can tell them what they need to do to fix the problem,” said Peace. “We try very hard to work with people and if they’re determined and willing to do what it takes, we very often happily present the keys to their new home in the end.”

"The entire community benefits from increased numbers of homeowners," Sherrod said. "When people buy a home, they are making a commitment to the community, settling down, and paying property taxes. They live and work in the area and are paying for local goods and services. It's a win-win situation."

Although regular funding will be available, the Stimulus Funds are unprecedented, providing an opportunity for more families to become homeowners.

End News Release

If you want more information about the qualification requirements please visit: USDA Direct Home Loan Guidelines

USDA Direct Mortgage Guidelines

Many people are aware of USDA Rural Development's Guaranteed mortgage program that offers 100% financing.  The Guaranteed loan focus is on buyers in the median income level which is derived from the income in a particular country.

On the other hand not many people are aware of the USDA Direct Loan program which is also 100% financing.  The Direct mortgage program focuses on buyers with low to very low income.

Low income is defined as 50 to 80% of the median income for that county.  Very low income is 50% or less of the median income.  You can see that the direct program makes housing available to a group of people that don't have a chance of getting a mortgage in the traditional market.  Even people on a fixed income can qualify for this program.

This program also lowers the bar on credit worthiness.  Direct loans allow for alternative credit sources if the buyer does not have credit.  The underwriters are also tolerant to some collections if there is justification.  I should tell you though that they do not overlook collections for cell phone companies or cable companies and similar stuff so make sure these are paid off.

The homes that USDA will finance must be in an eligible rural area.  That usually means areas with less than 10,000 population.  You can check the eligibility of a property address from the following website: http://www.rurdev.usda.gov/

To find out if you qualify for the USDA Direct loan you should contact your closest USDA office and they will send you a pre-qualification application.  It is short and easy to fill out.  If for some reason you do not qualify they will counsel you so that you will qualify in the future.  You can locate your office from the website I just gave you.  It is a good deal.  Check it out!

You can find out more about the Guaranteed loan program from the following website:  Rural Development mortgage guidelines

If you have any questions about the loans just leave a comment and we will respond to your inquirey.
Good Luck.

USDA Rural Development Guaranteed Program

The USDA Guaranteed loan program has clarified a guideline that has long been left to individual interpretation. RD Instruction 1980-D restricts applicants from owning more than one or ... multiple homes.

This guideline has been an issue for a long time. Most of the guidelines for this loan are the same as or derived from FHA Guidelines. So why has there always been a disconnect? As with any company, the regulations are thick and always changing, and employees are not trained. So, one office will allow ownership of another home and a different office will not.

RD AN No. 4454 has just addressed this. The Answer is:

Loan applicants are limited to retaining ownership in one dwelling other than the one associated with the loan request. To retain ownership of the dwelling and meet this eligibility requirement, the retained dwelling must be outside of the applicants local commuting area OR not be structurally sound, functionally adequate.

Manufactured homes that are not anchored on a permanent foundation are not considered structually sound and functionally adequate.

I hope this helps to clarify and or define the issue. You probably know more now than the underwriter. Refer them to the AN number above.

Good Luck.

FHA Gift Funds - HR 6694 - New Hope

I'm sure everyone is aware that on Oct 1st, HR 3221 will put an end to seller funded gifts for a buyers down payment on an FHA mortgage. The gifts are generally channeled through Nehemiah or Ameri-dream. There are strong arguments on both sides of this issue and I won't bore you by going into them here.

I was about to update my websites when I ran across an article on inman.com: Congress weighs reprieve for seller-funded gifts. HR 6694 would allow builders to continue providing down payment assistance.

I'm not sure how I feel about this yet but I will say the proposal does add more control or safe guards if you will, for the program. HR 6694 will allow borrowers with credit scores of 680 or more to use seller-funded down payments. A credit score of 620 to 680, if using down payment assistance would pay higher insurance premiums.

Borrowers with scores lower than 620 will not be allowed to use these gift funds until sometime in 2009 if HUD wants to expand the program. The issue here is FHA's insurance requiring taxpayer subsidies. The article goes into more detail so you should go read it.

I do like the controls they are trying to apply. I would do one more thing if I had a voice. I would make these gifts direct to the borrowers at closing and eliminate channeling it through Nehemiah or other such organizations. These organizations charge a large fee which helps to inflate the loan amount. Put it in the guidelines and eliminate the unnecessary middle man.

Home buyers with good credit need access to mortgages with no down payments. If HR 6694 does not go through median income families do have another choice that many people don't know exist. That option is the 100% LTV Rural Housing Loans. It is a very good loan and easy to qualify for. Go to this website and review the benefits and guidelines. 100% housing loans.

Zero Down Payment Mortgage

100% financing is still available in the mortgage market. I know, you listen to all the financial doom and gloom from the media and you would think every lender just locked their doors and went home. It's not a good situation but it is not as bad as the media wants you to think.

Remember, it is also an election year and every election year, both political parties talk about how bad the economy is until we believe them. Then one is elected and they save the day, ... and the economy. Don't ya just love it!!

Here is a news flash. People are still buying homes. Yes, mortgages are available and everyone should realize that this is the best time to invest, or purchase a home. (When the price is low.) Have you ever heard the term "A Buyers Market"? That is what we have here.

History shows that Real Estate and our economy runs in cycles. Back in the late 70's and 80's it was a 4-5 year cycle. You could graph it. Then, when the sub-prime loans were forced on lenders (early to mid 90's) by government regulation the cycle changed. They became longer and were more intense until it all caught up with us and here we are, like it or not.

I don't like it either but more than that I am tired of all the finger pointing and blaming, and dreading, and media hype. I don't believe a "bail out" is the answer but obviously, it is not my choice or yours, or we the people's choice. Our elected officials will make the decision and base it on "no stronger ground" than what you and I base our own opinion on.

Alright all ready! So do it, what ever it is, so We The People can get over it and move on. We have been through worse times and we will survive and prosper. I think it is in the DNA of the USA. (sorry, that was really bad) We survive in spite of the people we have elected to office.

If you must have 100 Percent financing it is available, ... just not in the form of previous no-doc, no-verification sub-prime loans. You have several options. FHA, VA, Rural Development, or special products based on perfect credit and stability. The USDA Rural Development product is one that few remember or know about.

USDA Rural Development has two programs: Direct and Guarantee. Their Direct program is a mortgage provided directly though the rural development office and your income can only be 80% of the median income for that area.

The Guarantee program on the other hand is provided by USDA approved lenders and Broker originators. It is a guarantee program, there is no subsidy or recapture, and the income restrictions allow up to 115% of the median income after special adjustments.

This is a 100% LTV mortgage based on the APPRAISED value, not the purchase price. The credit guidelines are very flexible and the guidelines have no minimum buyer commitment and no maximum on seller concessions. Note: some lender policies may be stricter here and USDA will always respect the lenders prerogative.

OK, so let all of us get over the failure of our market, roll up our sleeves and move on to a brighter future. Remember, NOW is the best time to purchase, during a buyers market!

You can read more about the guidelines for the rural housing mortgage at: zero down payment

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.

Always,

Connie