Financing

102% financing based on appraised value

Term

30-year fixed

Refinance Option

Yes – Rate reduction only - no cash back -  Reduced Guarantee Fee of .5%

Only existing GRH and Section 502 Direct loans are eligible for refinance

Mortgage insurance

No monthly mortgage insurance. One-time guarantee fee of 2.00%

Payment reserves

No payment reserve requirements

Downpayment

No downpayment

Seller concessions

No maximum.  If greater than 6%, comment from the appraiser required

Gifts

100% gifting permitted.  Donor must be disinterested third party.

Ratios

29/41 – exceptions encouraged with compensating factors and RD concurrence

Non-occupant Co-borrower

Non-occupant co-borrowers not permitted unless approved by RD

Installment debt

Include all installment debt greater than 6 months

Primary income

Two-year history

Self-employment

Two-years 1040s and P&L

Alimony/child support

12-month history, with proof of 3 years continuance

Part-time, Over-time & Bonus

24-month history

Disability benefits

Benefits letter , 3 years continuance and gross up 125%

SSI benefits

Awards letter or 2 months bank stmts, 3 years continuance and gross up 125%

Salary increases

Salary increases with 30 days of the first payment due date are acceptable

Maximum income

Use RD Moderate Income Limits    http://eligibility.sc.egov.usda.gov

Credit score

No minimum credit scores

Late payments

1 X 30 permitted in last 12 months with explanations – Exceptions may be granted if your borrowers have 620 or greater middle credit scores

Bankruptcy/Foreclosure

Chapter 7 and 13 must be discharged for 3 years – Foreclosures must be completed 3 years ago – Exceptions may be granted if your borrowers have 620 or greater middle credit scores

Collections

Accounts cannot have been placed  in collection status within the last 12-months  – Exceptions may be granted if your borrowers have 620 or greater middle credit scores

Judgments

Must be paid off for at least 12 months – Exceptions may be granted if your borrowers have 620 or greater middle credit scores

Verification of Rent

If the applicant’s middle credit score is under 620 a VOR is required for the most recent 12 months.

Previous Housing Payment

Not required

Non-traditional credit

Acceptable if no credit is available and borrower has no derogatory credit history. Alt trades must be VOR (management company or cancelled checks, no private party VOR for zero scores), electric, gas, phone, etc.

Credit report

RMCR or Tri-Bureau merged

Homebuyer education

Case by case basis or when required by RD

2/1 TEMPORARY BUYDOWN

2/1 Temporary buydown

Available with compensating factors, qualify at final note rate.

Closing costs

All closing costs may be financed, except discount points unless borrower is below the RD low income limit, then discount points may be financed

Seller concessions

All closing costs and prepaids may be paid by seller concessions

Gifting

100% gifting acceptable from disinterested third party

Cash contribution

No minimum cash contribution from borrowers

Unsecured funds

Borrowing of unsecured funds allowed with 660 credit score

Eligible areas

Property must be located in a RD eligible area  http://eligibility.sc.egov.usda.gov

Other Real Estate Owned

Borrowers must not own adequate housing.

Occupancy

Primary residence only

Property Type

Single family or RD eligible condo/PUD

Manufactured homes

Manufactured homes must be new and RD approved – Not permitted in AK, CT, DC, GA, HI, IL, MN, MS, ND, NE, NY, SD, TN, VT & WV

Swimming pools

No in-ground swimming pools (above ground permitted) 

Thermal Certification

Thermal insulation certifications are no longer required!

Home Inspection

Adequacy Certification

Homes must be certified as meeting HUD handbook guidelines 4150.2 & 4905.1. Some states may require specific inspection forms.

Termite inspection

All areas as required by RD

Well/Septic inspections

100% required - Septic inspection may be completed by FHA roster appraiser, Well test must be completed by state certified lab.

Repairs

100% of repairs may be financed based on as-improved value. If work is not complete prior to closing an escrow hold back may be established at 150% of repair cost.  (more rules apply, please contact your AE for more details)