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Rural Home (Development) Facts
 
Program Specs
  • Not just for first time buyers
  • 100% financing
  • No maximum purchase price
  • No monthly private mortgage insurance
  • No recapture
  • No asset limit
  • No reserve minimum
  • Seller can pay all fees to include: 2% guarantee fee, all closing & prepaid costs, any tests required
 
Property Specs
  • Existing single family housing & condominiums
  • No acreage limit
  • Cannot have income producing structures on property such as grain bins, silos, & hog barns
  • In-ground pools allowed as long as value is not higher than house
  • Appraisal done by FHA appraiser
 
Inspections Required
  • Well always needs to be tested for potability only…not lead
  • Septic needed only if appraiser makes comment on appraisal
  • Pest inspection needed only if infestation is suspected by appraiser
 
Non-Issue Items
  • Missing handrails
  • Cracked windows
  • Dripping faucet
  • Peeling paint on door frame and windows
  • Flat roof on garage
  • No smoke detectors
  • No GFI’s in kitchen/bathrooms
  • Insulation
 
Other Information
  • Loan can close within 30 days of application
  • 2% guarantee fee can be rolled into the loan amount as long as property appraises
  • Must include all income from the household
  • Upcoming pay increases can be used as a compensating factor
  • 30 days of paystubs and last 2 years’ W2’s needed for income
  • 2% guarantee fee is tax deductible
  • Can have rental property as long as it is not within commuting area of new home and job; need to use
    100% of the income to qualify for the program
  • Income limits
  • Property guidelines regarding location of house
  • Qualifying ratios of 29/41 can be expanded
 

The USDA office in the area of specific properties signs off on each loan, however, there are numerous lenders who actually process and underwrite each of these loans using a combination of guidelines from USDA and ones they have come up with. For instance, USDA has no credit score requirements but lenders will and do. The lowest credit score allowed at this time has been increased to 600. At this score lenders are not flexible when it comes to ratios. At 620 and higher, there is more flexibility and lenders have gone as high as 35/50 with compensating factors. (USDA’s guidelines have no mention of specific ratios.) At credit scores of 680 and higher, there is a lot more room for flexibility. Lenders also decide whether to have buyers pay off any outstanding, old debt that shows up on a credit report.

Go to the USDA income and property eligibility site for additional information:
http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
 
Information Courtesy Of:
 
Ava Colonna
Senior Loan Officer at SB Mortgage
Home/Office: (860) 564-7028
Cell: (860) 303-3758