USDA Rural Program Guidelines

Borrower Eligibility
U.S. citizens
Permanent resident aliens
First time homebuyers allowed
Non-occupant co-borrowers NOT allowed
Commitment Fee
USDA charges a 1% Commitment Fee
Commitment Fee can be financed into the loan
Example:
Purchase price - $100,000
Base Loan amount - $100,000
Commitment Fee - $1,010 ($100,000 [purchase price] /.99 - 100,000)
Maximum financed loan amount = $101,010
Downpayment Requirement
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
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
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
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
County specific. Reference the USDA website for adjusted household income limits
Maximum Loan-To-Value
Maximum loan-to-value is 101.01%
Maximum Mortgage Amount
None
Minimum Credit Score
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
USDA Loan requires a monthly mortgage insurance premium with an annual factorial of .35%
Multiple Property Ownership
USDA Rural Development often won't allow applicants to own other properties
Exceptions include when the other property owned is:
Not owned in the local commuting area as the new property; or
Not structurally sound and/or functionally adequate
Manufactured home not on permanent foundation
Occupancy Type
Owner occupied only
Qualifying Ratios
29/41% debt-to-income (DTI) - Target
35/48% debt-to-income (DTI) - With compensating factors such as:
680 or higher credit score
No or low "payment shock" - less than a 100% increase in proposed mortgage payment Vs. current rental housing expenses
Fiscally sound use of credit
Ability to accumulate savings
Stable employment history with 2 or more in current position or continuous employment history with no job gaps
Cash reserves available for use after settlement
Career advancement as indicated by job training or additional education in the applicants profession
Trailing spouse income - as a result of a job transfer, the house is being purchased, prior to the secondary wage-earner obtaining employment. If the secondary wage-earner has an established history of employment and has a reasonable chance to obtain new employment in the area
Low total debt load
Seller Contribution
Unlimited Contribution towards closing costs, prepaids, discount points, buydown fees, and upfront Commitment Fee
Transaction Types
Purchase
Rate/Term Refinance on existing USDA loan