What is rural develoment? Census-based


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WHAT IS RURAL DEVELOMENT?



WHO CAN DO USDA LOANS?

  • Approved lender with HUD, VA, Fannie Mae or Freddie Mac

  • State Housing Agency

  • Farm Credit Service



IT’S THE GOVERNMENT!

  • Pays for itself – doesn’t use taxpayer money

  • Funded through the 2% Funding Fee

  • (which can be financed into the loan!)



LOAN PURPOSE

  • Purchase new construction

  • Purchase existing home

  • Refinance (only if currently have a direct Rural-Development Loan)

  • Purchase Mobile Home (very limited; difficult)



REASONS TO NOT USE RURAL DEVELOPMENT FOR A BUYER

  • Geographical Limitations

  • Maximum Income limitations

  • Can’t buy house with in-ground pool (can try for exception to this)

  • Primary Home Only



INCOME QUALIFICATIONS

  • Household adjusted annual income cap uses ALL occupants whether on the loan or not, that are 18 and over

  • Counts gross income, overtime, commission, bonuses, net self-employment income, Social Security, Child Support, unemployment, etc.

  • Based on family size & county where property is located

  • http://eligibility.sc.egov.usda.gov



ADJUSTMENTS TO INCOME

  • $480/Year per minor or full-time student

  • Verified child care expenses

  • $400/Year if borrower or co-borrower is over 62 or disabled





GEOGRAPHICAL QUALIFICATIONS

  • ALL of Walton County

  • Destin

  • Niceville

  • Valparaiso

  • Crestview

  • West of Hurlburt in Okaloosa County

  • ALL of Santa Rosa County



GEOGRAPHICAL LIMITATIONS



BENEFITS TO BUYERS

  • Can finance 102% of appraised value, without getting cash back at closing (can get EMD, but no more)

  • No Monthly Mortgage Insurance

  • 30-Year fixed rate with very competitive rates

  • No loan limits (DTI/income limitations)

  • Closing costs can be financed

  • Unlimited gift or seller contributions

  • No reserves required



Sales Price: Appraisal: Seller Paying: EMD: Closing/Prepaids 2% Funding Fee:



Sales Price: Appraisal: Seller Paying: EMD: 2% Funding Fee:

  • $100,000

  • $105,000

  • ALL Closing/Ppds.

  • $500

  • $2,000



QUALIFYING

  • Debt to Income Ratios = 29/41

  • Debt to Income Ratios = 31/43

  • (for homes built after January, 2001)

  • Can go higher on DTI w/compensating factors:

    • 660+ Credit Score
    • Zero or very little payment shock
    • 2+ years continuous employment at same job
  • Rental/Housing history for 12 months required if credit score 619 or less (cancelled checks); if 620 or higher, not required



OTHER CRITERIA

  • Do not own a dwelling currently

  • Lack sufficient resources to secure conventional credit

  • US Citizen, Permanent Resident, Resident Alien, or Qualified Alien

  • Have legal capacity to enter contract

  • Primary Residences Only



PROPERTY ELIGIBLITY

  • Must have access from a street, road or driveway

  • Site value less than or equal to 30% of total value

  • Leasehold estates (where applicable)



OTHER PROPERTY REQUIREMENTS

  • If on a well & septic, must be tested and meet county requirements

  • Pest inspection required – deficiencies must be corrected

  • Escrow for repairs under certain limited circumstances and will be 150% of cost

  • New construction – must have warranty



FUNDS AVAILABLE

  • RD has annual amount of funds appropriated by Congress

  • Funds must be reserved by the lender but can’t be until there is a fully-executed sales contract

  • Reservation is valid for 60 days

  • Have been known to run out before end of fiscal year



QUESTIONS?




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