USDA Mortgage Loan Presentation For North and South Carolina
USDA Rural Housing
What is Rural Development? The Rural Housing Service (RHS) programprovides very-low, low and moderateincome residents with better access toaffordable housing finance options withlittle or no down payment or out-of-pocketcosts.
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!)
What is Rural Development?Two USDA programs are available:• Direct (low income up to $48,000 for 1-4 ppl)• Guaranteed (income up to $74,050 for 1-4 ppl)
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)
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)• Unlimited 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 like NC Housing
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)
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 usually eliminate the need for home inspection
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.
Credit HistoryIf any of these are part of the borrowers credithistory, they will not be able to obtain USDAfinancing:• 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.
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
Income Limits • Use of the eligibility website is suggested to obtain adjusted eligible income per household http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.doEligible 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
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_Income_Limits.html ---------- Adjusted Income Limits ----------County 1Person 2Persons 3Persons 4Persons 5Persons 6Persons 7Persons 8PersonsBrunswick $ 74,050 $ 74,050 $ 74,050 $ 74,050 $ 97,750 $ 97,750 $ 97,750 $ 97,750Robeson $ 74,050 $ 74,050 $ 74,050 $ 74,050 $ 97,750 $ 97,750 $ 97,750 $ 97,750Other Area $ 74,050 $ 74,050 $ 74,050 $ 74,050 $ 97,750 $ 97,750 $ 97,750 $ 97,750
Property Requirements• Properties must be located in RD eligible areas http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?Home• 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 manufactured housing
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 (exceptions can be made)• 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)
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 pmi (a lot cheaper than FHA)• No "creative financing" needed
Resources• USDA website to access handbook and Administrative Notices www.rurdev.usda.gov/regs/regs_toc.html#1980• USDA National Office website www.rurdev.usda.gov
Russell Smith Sr Loan Officer PrimeLending, A PlainsCapital Company 128 Jefferson Street, Whiteville, NC 284725917 Oleander Dr, Ste 206, Wilmington, NC 28403 910-914-0655 email@example.com www.russelldsmith.com