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USDA Rural Housing – kick butt 100% financing that you’ll probably qualify for!

So you’re looking to buy a home, you don’t have a lot of cash to work with & want a low payment. Looks like you better go to Craigslist & see the rental section right?

Not so fast young grasshopper (who doesn’t love David Carradine). Enter USDA Rural Housing..…

Q: What is USDA Rural Housing?
A:
USDA Rural Housing Loans also called a Rural Development Loan, is a government insured home loan offering 100% financing to qualified buyers, allows for all closing costs to be paid for by the seller or financed into the loan (& the crowd goes wild!!). They offer some of the lowest rates of any loan at a fixed interest rate.

Q: What are the requirements for USDA Rural Housing?
A: 3 parts to this answer.

1. Credit Worthiness: Your thinking, “Ok, I knew there’s a catch!” Relax Danielson. When your credit is reviewed for a USDA Loan the underwriter will be looking for a history of paying your bills on time. Slow pays & credit blemishes may be overlooked if you have established your credit over the past 12 months. A good credit explanation letter goes a long way. If you say “I didn’t pay because I really needed that new Trans Am to pick up a hot chick” well that’s not going to win you any brownie points. “I didn’t pay because I lost my job/got the bubonic plague/had 8 kids like octomom HOWEVER now I’m back to work & everything is hunky dory! Just check X references!” That will generally go much further….unless you still have bubonic plague. If you have open judgments or collections the UW will most likely ask that they be paid in full before you close.
   
2. Income: You will need to be able to document your income on a USDA Rural Housing Loan. USDA will generally want to see a two year history of employment or consistent income. “I’m a pizza guy, waiter, Columbian drug lord & can’t get paid under the table” isn’t going to fly. There are exceptions on the two year requirement can be made for applicants such as students. On a USDA Loan Assets are not required for approval, but can help overcome any possible blemishes on credit. Keep in mind you MUST be within the maximum income limits. Click HERE for the USDA Rural Housing Income Eligibility.
   
3. Where you Live: In order to qualify for a USDA Rural Housing Loan your home must be in designated USDA rural area. You can check the USDA eligibility of your county. It might will surprise you how many areas qualify! Scroll to the bottom to see some of the areas. I think you’ll be pleasantly surprised!
   

Q: Is the USDA loan program limited to first-time buyers?
A: No, the USDA Rural Housing Program can be used by first-time buyers and repeat buyers.

Q: What mortgage products are available with a USDA mortgage?
A: The USDA / Rural Housing Program offers 30-year fixed rate mortgages only. There is no 15-year fixed rate mortgage. There are no adjustable-rate mortgages. 30-year fixed only.

Q: I can’t afford closing costs. Can I get a gift for my closing costs?

A: Yes, USDA loans allow gifts from family members and non-family members. You will need a gift letter to accompany your loan application. Your loan officer (that would be me) can give you one.

Q: Can I use the USDA loan program for an investment property or vacation home?

A: No sir, the USDA Rural Housing Program is for primary residences only.

Q: Is there a minimum credit score for the USDA loan program?

A: There is no minimum score, per se, but 640 is generally regarded as a cutoff point. If your FICO is below 640, you should be prepared to explain why your credit score is below 640, and provide documentation. If you are without a credit score, your lender may accept “alternate” tradelines to establish credit history.

This list is NOT meant to be a comprehensive overview of what the USDA allows, but it covers a lot of good ground.

If you want more information, talk to your lender (that would be me J) or reach out to me directly. USDA mortgage rates are low and my office underwrites and funds our USDA loans in-house.

Now here’s the great news for all of my SEI Investments, Vanguard, De Lage Landen, Pfizer clients in & around Montgomery County. The following cities qualify:

Collegeville, Royersford, Evansburg, Trappe, Limerick, Schwenksville, Skippack, Oaks, Kimberton, Chester Springs, West Pikeland, Mont Clare, Birchrunville, Spring City ALL QUALIFY!!! (Generous applause please!!!)

So now that I have your attention, what’s the next step? Give me a call shoot me an email with questions! It’s that simple.

While credit guidelines have tighten up quite a bit in recent years, there are many programs to help first time homebuyer’s purchase their home. One frequent question I run into is: “what if my credit is bad?”

My response: what is bad? There are differing levels of bad perceived bad. There are the following:

• Your credit is fine – this normally is the accountant/bookkeeper (love that word & its 3 double vowels) that paid a credit 1 day after the grace period & thinks they’re condemned to credit hell for an eternity. Don’t let your OCD stop you from applying for a mortgage. Find out before you decide to never attempt to purchase a home.
• Your credit needs some work but you still qualify – this person has sufficient good accounts but had an unpaid hospital bill, utility bill or a minor 30 day late with the last year. No worries you will still qualify.
• Your credit needs work: You lost your job, had a few rough spots but you’re back on your way. I’ll tell you what accounts are there & which you need to clean up.
• Your credit makes my eyes burn – You’ve run into some serious credit issues that may will take time to correct however don’t worry. I’ll recommend you to a reputable credit counselor who can help you make the necessary corrections.

• Your credit makes me scream Daaaaamn! – In this instance if I added your 3 credit scores together they still wouldn’t equal an acceptable score. No worries I only ever found 1 person like this in 15 years. This client lead deliberately avoided paying everyone & everything as long as they can remember because they simply didn’t give a (see side picture). In this case, stick to renting because you don’t deserve a home. You’ll even default on your rent. When you start to CARE, call me & I’ll be happy to help.

No matter what your plight, get your credit checked….except for daaaamn credit type people. Please only call me when you decide to care about your future & I am willing to help.

Programs such as PFHA understand that it’s not a perfect world but people are trying. The rates are slightly higher at the moment but still competitive. The bottom line is that you can qualify & start building real equity for yourself & your family.

For those who have hit rough times but DESIRE to get back on their feet, it may be a long & sometimes challenging road. If you have too many accounts & there’s no way you can ever pay them off, a Chapter 7 bankruptcy may be your best option. I would be happy to recommend an attorney. But again, get your credit checked first. It may be not as bad as you think. Always remember that anything worthwhile in life you have to work for.

Joe Gonzalez