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100 percent financing USDA loan is available again

usda 100 percent financing loan100 percent Financing USDA Loans are available again after being suspended for the past few months due to a lack of funding.

On July 27th 2010, the United States House of Representatives Passed Bill HR 4899, which has funds built into it for the USDA Guaranteed Rural Housing Program.  President Barack Obama put his signature on the Bill 2 days later.

The greatest benefits of a USDA loan are:

  • No down payment (100 percent financing)
  • No mortgage insurance
  • 30 year fixed interest rate

Although USDA loans do not require a down payment (100 percent financing) and there is no monthly mortgage insurance premium, there is a one time, upfront guarantee fee.

The guarantee fee has been increased from 2.125% to 3.5% of the purchase price. This fee is financed into the loan, however, keeping the closing costs down.

Some of the “Differences” for qualifying for a USDA rural development loans are:

Property Qualification Requirements – A home must be located in an USDA eligible area.  The simplest way to determine if you are in one of these areas is by entering an address into the USDA Property Eligiblity map.

If the property address is determined to be in an eligible area, you may use a USDA loan to purchase the home.

Income Requirements – The income limits on a USDA loan are based on number of working adults in the household regardless of whether or not they are on the loan.  There are a series of credits that are afforded for child care and dependents under 18 as you calculate the family’s “qualifying income”.  The USDA site has this Income Calculator available for you to determine whether or not your family will qualify.

If you have any questions about qualifying for a 100% financing USDA loan, feel free to shoot me an email at JeffA@BroadviewMortgageCorp.com, leave a comment below or call/text me on my cell phone – 951-264-4026

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4 Responses to 100 percent financing USDA loan is available again

  1. SAM September 28, 2010 at 9:55 am #

    Concerned about getting USDA approval before this deadline or lack of available USDA funding???
    Is this true? Please advise.
    Thank you.

    • Legacy Content September 28, 2010 at 10:23 am #

      Sam, USDA has been restructured to be perpetually funded through the increased Guarantee fee from 2.125% to 3.5%.

      The challenge we have had up to this point is that we (lenders) can fund USDA loans, but USDA is not purchasing the loans from us, freeing up that money to lend again.

      It is for this reason that USDA fundings have been somewhat suspended.

      Are you in escrow on a home now? Feel free to give us a call or shoot me another email if I have not properly answered your question 🙂

  2. Terry Harrell August 4, 2010 at 11:39 am #

    I currently work for the mountain empire school diatrict I purchased my home through Wells FArgo I hate dealing with them. We currently are paying our insurance taxes and PMI all inour payment We owe $239,00 on our home Our rate is fixed at 7%
    Should I stay with this loan or is there something better out there for me

    • Legacy Content August 4, 2010 at 5:14 pm #

      Hi Terry,
      There are a couple of factors to consider when considering a refinance. The interest rate most certainly warrants a close look – you should be able to lower this rate 2% +/-

      The biggest challenge that home owners are encountering is the equity. You owe $239,000 – do you have any idea of what it’s worth?

      Is your current loan an FHA loan? If so, there’s a very easy process to reduce the rate, it’s called an FHA streamline. An FHA streamline does not require an appraisal and we can refinance you up to 115% of the value of the home. So even if you’re upside down, you can still lower your rate.

      There certainly is no risk in looking at any of these options. If you would like to explore this a little further, feel free to give us a call at 866-667-6724 – we are a direct lender.

      The last factor