Mortgage Guideline Tip - USDA: Rural Housing Guarantee Loan

 The Guaranteed Rural Housing Loan Program is offered through the Rural Housing Service (RHS), an agency of the USDA. The program is designed to help low-to-moderate income families achieve home ownership in eligible rural areas.  To see see eligible areas click here.

These loans are 100% financed, requiring no down payment.  First time home buyers can use this loan as well as home buyers who have owned multiple times.  However, a buyer cannot own a home at the time of closing with a USDA loan.  The only exception is if the home buyer had to move due to a job relocation.  There are specific requirements for getting a USDA loan.  Here is a outline of the requirements set by New Penn Financial.

• Max Loan Amount
• The highest loan amount is $417,000. (DE, PA & MD)
• Credit
• The buyers needs to have a minimum credit score of 620.
• There cannot be any outstanding collections accounts on the borrower's credit report.
• The font end ratio cannot exceed 29%.  This is the portion of your income used to make your mortgage payment.  (This may vary with compensating factors)
• The back end ratio cannot exceed 41%.  This is the portion of your income that is used to pay our total debt, including your mortgage payment.  (This may vary with compensating factors)
• There is a credit depth requirement.  At least one applicant whose income or assets are used for qualification must have at least three credit lines that have existed for at least 12 months.
• Deferred Student Loans - Even if you loans are deferred a payment will be required for qualifying.  USDA will not exclude deferred student loan payments 
• Derogatory Credit
• No foreclosures within 3 years.
• No short sale in the previous 3 years (if you were not late prior to the short sale you may be eligible immediately)
• No bankruptcies within 3 years
• Guarantee Fee
• There is a guarantee upfront fee of 2%.  There is a monthly fee of .5%.  This is in lieu of mortgage insurance.

Wondering if USDA is a good loan for you?  Do you have any questions?  

Please feel free to call or email with any questions.  My team and I would be happy to assist!