USDA Rural Housing

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USDA RuralHousing
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What is Rural Development?

• The Rural Housing Service (RHS) program
  provides very-low, low and moderate income
  residents with better access to affordable
  housing finance options with little or no down
  payment or out-of-pocket costs.

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What is Rural Development?

• Census-based
• US Department of Agriculture
• Guaranteed against loss by USDA
• Pays lender if borrower defaults
• Funded through the 2 Funding Fee
  
• (which can be financed into the loan!)

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What is Rural Development?

• Two USDA programs are available
• Direct (low income up to ________ for 1-4 ppl)
• Guaranteed (income up to _______ for 1-4 ppl)
• ENTER YOUR MAXIMUM AMOUNT PER YOUR COUNTY.

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Advantages Benefits

• Not just for first-time buyers anyone can
  qualify (based on income and property
  restrictions)
• No loan limits (DTI and income limitations)
• No down payment
• Can finance 102 of appraised value
• Low Monthly Mortgage Insurance (0.3
  monthly for the life of the loan)

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Advantages Benefits (cont.)

• No cash reserves required
• Closing costs can be financed or gifted (gifts
  are allowed from relatives who are NOT members of
  the household)
• Up to 6 seller contributions allowed
• Repairs may be financed up to 100 of appraised
  value or as improved value
• No FHA approval needed
• Can partner with other funding sources, such as
  state bond programs

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Program Features

• Owner-occupied principal residence ONLY
• 30 year fixed rate with competitive rates
• 2/1 buydown permitted (qualify at note rate)
• Borrowers must qualify with both income and
  geographic requirements
• Non-occupant co-borrowers are NOT permitted
• Borrower can be permanent or non-permanent
  resident alien, and must have a valid SS
• Cannot own another property (current home must be
  sold prior to or concurrently with the new
  purchase)

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Other Features

• Streamline documentation with 660 or higher FICO
  (rental history waiver certain derogatory
  credit waivers allowed)
• Credit waivers with compensating factors
• DTI waivers (above 29/41) with compensating
  factors
• Student loans must be included in ratios
• Reservation of funds required
• Appraisals prepared by HUD approved appraisers
  can eliminate the need for home inspection

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Credit History

• Non-traditional credit is allowed (3 to 5 sources
  of credit is required).
• Outstanding collection accounts, regardless of
  age, that are currently delinquent are NOT
  allowed. Collections must be paid (not including
  medical collections).
• Any outstanding judgment obtained by the US in a
  federal court is NOT allowed.
• Outstanding tax liens, no matter their age, are
  unacceptable.
• BK not allowed in the last 36 months.

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Credit History

• If any of these are part of the borrowers credit
  history, they will not be able to obtain USDA
  financing
• Judgments caused by nonpayment that is currently
  outstanding or has been outstanding in the past
  12 months.
• 2 or more rent/mortgage payments paid 30 days or
  more past due within the past 3 years.
• Any collections paid in the past 12 months.
• Mitigating circumstances may be considered in the
  event of inaccurate credit information.

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Eligible Borrowers

• US citizens
• Non-US citizens, provided the borrower satisfies
  all of the following requirements
• Occupies the property as a permanent residence
  and
• Has a social security number and
• Is eligible to work in the United States and
• Is a Qualified Alien with proper documentation

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Income Limits

• Use of the eligibility website is suggested to
  obtain adjusted eligible income per household
• http//eligibility.sc.egov.usda.gov/eligibility/we
  lcomeAction.do

• Eligible deductions may be used for income
  qualification such as

• Household members under 18 years of age
• Disabled or handicapped members of household over
  18 years of age
• Full-time students 18 or older
• Individuals 62 years of age or older
• Annual childcare expense for children up to 12
  years of age if both parents are employed
  full-time

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Income Limits by County
Below is an example of the income limits where
Sue Pullen resides. Be sure to delete the box
below and input your local county info. You can
find your local county information by clicking
this link  http//www.rurdev.usda.gov/HSF-Guar_I
ncome_Limits.html
---------- Adjusted Income Limits ---------- ---------- Adjusted Income Limits ---------- ---------- Adjusted Income Limits ---------- ---------- Adjusted Income Limits ---------- ---------- Adjusted Income Limits ---------- ---------- Adjusted Income Limits ---------- ---------- Adjusted Income Limits ---------- ---------- Adjusted Income Limits ---------- ---------- Adjusted Income Limits ----------

County 1Person 2Persons 3Persons 4Persons 5Persons 6Persons 7Persons 8Persons

Pima 49,550 56,600 63,700 70,750 76,400 82,050 87,750 93,400

Maricopa 51,650 59,050 66,400 73,800 79,700 85,600 91,500 97,400

Other AZ 49,550 56,600 63,700 70,750 76,400 82,050 87,750 93,400

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Property Requirements

• Properties must be located in RD eligible areas
• Single family detached
• Condominiums/PUDs warrantable to RD guidelines
• If on a well and septic, must be tested and meet
  county requirements
• Termite inspection required deficiencies must
  be corrected
• New construction must have warranty
• No existing manufactured housing

http//eligibility.sc.egov.usda.gov/eligibility/we
lcomeAction.do?Home
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Property Requirements

• Properties cannot be located in a flood zone
  (exceptions can be made)
• Leaseholds are allowed if long-term leasing of
  homesites is well established local practice
• The value of the site cannot exceed 30 of the
  total value of the property
• Property must have dependable water and waste
  disposal systems approved by local authorities
• Property must have access to a paved or
  all-weather surface street, road or driveway
• Properties with pools typically are not
  acceptable (the value of the pool is subtracted
  from the appraised value)

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Realtor Benefits

• More buyers qualify to buy your listing
• Quick turn times
• Great for rural listings
• No maximum loan amount
• No down payment required
• Closing costs can be included in the loan (up
  to the appraised value)
• Low monthly mortgage insurance
• No "creative financing" needed

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Resources

• USDA website to access handbook and
  Administrative Notices
• www.rurdev.usda.gov/regs/regs_toc.html1980
• USDA National Office website
• www.rurdev.usda.gov

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