USDA Rural Program Guidelines
Borrower Eligibility | |
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U.S. citizens | |
Permanent resident aliens | |
First time homebuyers allowed | |
Non-occupant co-borrowers NOT allowed |
Commitment Fee | |||||||||
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USDA charges a 1% Commitment Fee | |||||||||
Commitment Fee can be financed into the loan | |||||||||
Example: | |||||||||
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Downpayment Requirement | |
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No down payment is required | |
If borrower has adequate liquid assets (i.e. 20% of the property purchase price) to obtain conventional financing the borrower may be ineligible for the USDA Rural Development Loan |
Eligible Properties | |
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Must be in an eligible USDA Rural Development Location | |
Owner-occupied properties | |
Existing attached & detached single family residences | |
New construction with permanent financing only | |
PUD's (i.e. Townhomes) | |
Condo-units. HUD, VA, FNMA or FHLMC approved project | |
Log cabin homes, provided Appraisal Report lists other comparable log cabin homes that have recently sold in the area |
Ineligible Properties | |
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Co-ops | |
Mixed-use | |
Condotels | |
Manufactured homes | |
Single Family Homes where the land value exceeds 30% of the appraised value AND can be sub divided. |
Loan Amount | |
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Minimum loan amount: $80,000. (Note, this is an internal lender guideline. The USDA Loan program has no minimum loan amount guideline. If you are purchasing a house with a price less than $80,000 contact other lenders to determine if they will service your mortgage requirements.) | |
Maximum loan amount: No limit. The maximum loan amount that a borrower can qualify for will be determined by the borrowers debt to income ratio and Guaranteed Underwriting System’s findings |
Maximum Income Amount | |
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County specific. Reference the USDA website for adjusted household income limits |
Maximum Loan-To-Value | |
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Maximum loan-to-value is 101.01% |
Maximum Mortgage Amount | |
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None |
Minimum Credit Score | |
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Middle Credit Score - 640 for each applicant for GUS automated underwriting approval | |
Middle Credit Score - 580 for each applicant for manual underwriting approval and a documentable rent history within the last 12 months. |
Monthly Mortgage Insurance Premium (MIP) Requirements | |
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USDA Loan requires a monthly mortgage insurance premium with an annual factorial of .35% |
Multiple Property Ownership | |||||||
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USDA Rural Development often won't allow applicants to own other properties | |||||||
Exceptions include when the other property owned is: | |||||||
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Occupancy Type | |
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Owner occupied only |
Qualifying Ratios | |||||||||||||||||||
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29/41% debt-to-income (DTI) - Target | |||||||||||||||||||
35/48% debt-to-income (DTI) - With compensating factors such as: | |||||||||||||||||||
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Seller Contribution | |
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Unlimited Contribution towards closing costs, prepaids, discount points, buydown fees, and upfront Commitment Fee |
Transaction Types | |
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Purchase | |
Rate/Term Refinance on existing USDA loan |