What is the guarantee?

USDA Rural Development provides the full faith and assurance of the U.W government that any financial loss resulting from servicing the loan will be reimbursed in full up to an amount not exceeding 90% of the original loan amount.  All loss up to an amount not exceeding 35% of the original loan is fully reimbursed.  Losses exceeding 35% is 85% reimbursed.
 

What is the advantage to the customer?

100% financing, no MIP/PMI, no restrictions on size or design and flexible underwriting are just a few of the advantages.
 

What are the eligibility requirements?

Have adequate and dependable income (up to 115% of the adjusted area median income), have acceptable credit, do not own a dwelling in the local commuting area, US citizen or permanent resident, have the ability to personally occupy the home on a permanent basis and are unable to quality for conventional mortgage credit.

 

Can any lender originate GRH loans?

Yes, however, only Agency approved lenders may submit the loans.
 

How long does it take to get an answer from USDA Rural Development?

The review process takes 24 to 48 hours, upon receipt of a complete loan package from an approved lender.
 

Is approval from a USDA Rural Development office required prior to closing the loan?

Yes.  Approval must be obtained before you can close the Guaranteed Loan.  Approval is granted from the local office servicing the subject property county.

 

What is the maximum Interest Rate and term?

Refer to the GMG Rate Sheet for rate/price information.
 

What is the maximum loan amount?

The loan amount is limited by the market value and repayment ability.  Check this website for property eligibility: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
 

What is the maximum LTV?

It can be up to 100% LTV plus the Agency guarantee fee…not to exceed 102%.
 

What is the Guarantee Fee?

The guarantee fee is 2% of the total loan amount  for purchase transactions and 0.5% of the total loan amount for refinance transactions.

 

What are the qualifying ratios?

PITI Ratio – 29%.  If applicable, add 2% for newer energy efficient homes.

TD Ratio – 41%.  If applicable, add 2% for newer energy efficient homes.
 

Is there a minimum credit score?

Yes.  580 is the minimum middle credit score for the lowest scoring borrower in the transaction.  For a FICO score 620 or greater, no comment is required.  FICO’s less than 620 require an adequate credit history and borrower credit explanation(s) to demonstrate the customer is creditworthy.

 

What about location?

The dwelling must be located in an eligible rural area.  (http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do)
 

What about refinancing an existing mortgage?

Guaranteed loans can only be used to refinance existing USDA Rural Development guaranteed or direct loans.
 

Can GRH Loans include acreage?

Possibly.  The acreage must not contain any income producing facilities and the value of the acreage may not exceed 30% of the total loan.
 

Can Manufactured Homes be financed?

No.  Manufactured and Mobile Homes are not eligible for financing with GMG.
 

Can the property contain an in-ground swimming pool?

Waivers may be granted (on a case by case basis) if the swimming pool does not contribute significant value.
 

What are the required inspections?

The property must meet FHA requirements or similar standards.  An FHA roster appraiser can verify adequacy/working order of the electrical, plumbing, heating, water and waste disposal on existing dwellings.

 

What are the USDA Rural Development Thermal Requirements?

As of 1/10/2008, there are no thermal requirements on existing homes.  New homes must still meet the standards for new construction currently prescribed by locally adopted building and model energy codes.

 

Is homebuyer education required?

Homeownership Counseling is required in the following states:  California, Florida, Georgia, Indiana, Louisiana, Minnesota, Nebraska, South Carolina, Texas, Washington, and Wisconsin.

 

Are seller concessions allowed?

6% seller concessions towards closing costs are allowed.
 

Who approves the Appraiser?

The appraiser must be licensed by the State to complete appraisals.
 

Can repairs be included in the loan?

No.  Additionally, GMG does not allow escrowing for repairs.
 

Are alternate verifying income documents allowed?

Yes.  Paycheck stubs, payroll earnings statements and W-2 tax forms for previous 2 tax years, and telephone verification of employment.