USDA Home Loan Funding Commitments

The USDA is conditionally funding USDA home loans right now. That means that although congress has not yet approved funding to begin the new fiscal year, USDA mortgages can still be written. It basically comes to being an IOU from the government.

You can still get and close a USDA mortgage so don't let this news stop you. Remember that USDA loans can be no money down loans up to 103% of the appraised value of the home. USDA loans require low credit scores than conventional loans. They are a great option for many people. With rates being really low, this may be your best time to finance a home for decades.

FHA, VA and USDA Loan Changes in October

The new fiscal year is looming for the federal government and changes are being made to the primary government mortgage loan programs. VA, FHA and USDA mortgage programs will see changes and will will be effective October 1, 2011.

There's a favorable change for VA loans. The funding fee for these mortgages will be reduced from 2.15% to 1.5%. VA mortgages have the least default rate of any government guaranteed loans and that smaller rate is factored into the decrease in the loan fees.

FHA loans will be making a major change that will affect buyers, sellers and mortgage lenders. The highest mortgage limit of FHA loans will be lowered appreciably. The highest obtainable amount varies by location, but in a number of locations, the amount is going to go down by more than 35%. The fall in the maximum mortgage limit is centered on reductions in home values and prices over the past few years. These new maximum amount rates will go into effect October 1st.

Rural development loans, USDA home loans will be affected in 3 ways. First, the loan funding fee will fall from 3.5% to 2.0%. The drop in the funding fee is good news, but the addition of a new requirement balances that drop.

The second balancing change for USDA loans is that for the 1st time, mortgage insurance will be mandatory for USDA guaranteed loans. The mortgage insurance premium (MIP) will be set at 0.3% yearly of the loan amount.

Let's look at how these changes work against each other. For a $100,000 mortgage, you will pay $1,500 less in the loan funding fee, but will pay $300, or 0.3%, in mortgage insurance. The insurance payment will come out monthly at roughly $25. As you can see, the difference will be in your favor for the 1st 5 or so years, but then you will carry on funding the MIP for the period of the loan.

The third change to USDA loans is in the USDA eligibility maps. These maps show properties (houses and condos) in regions eligible for USDA mortgages. As a result of development in many regions, homes in suburban locations are presently eligible. That will change on October 1st. In spite of this, be certain to talk with a USDA mortgage specialist since many locations that you might not think eligible will still be included in the maps. A specialist can also tell you about homes close to your location that  could permit you to take advantage of the USDA loan program.

Government mortgage loan programs make available guaranteed mortgages that require smaller or no down payment and less stringent credit standards. Qualify for one of these loans programs can allow you to purchase your next home will less money out of your pocket through lower or no down payment and lower closing costs.

USDA Loans Changes in October

There are some changes being made to the USDA home loans program beginning October 1, 2011. The changes appear to offset each other, but may change the maximum loan amount for some borrowers.

Two changes are most significant. First, the good news - the up front guaranty, currently at 3.5% will fall to 2.0%. Since the fee is most often rolled into the loan amount, this will decrease the loan amount. This fee was designed to partially cover the risk of 100% for the lender. The second change is the introduction of a 0.3% monthly insurance premium.

Up until now, there has been no monthly insurance payment for USDA mortgages. The 0.3% is an annual fee, so on a $100,000 mortgage, the amount would be $300 per year or $25 per month. Where this can affect a loan is in the debt to income (DTI). Since the additional insurance will be added to the monthly payment, it changes the ratio. For USDA loans the 29/41 ratio is most used. That mean that 29% of your gross income can be applied to your monthly mortgage payments, and 41% to overall debt including the mortgage, car loans, credit cards and so on. Adding the insurance could hurt a borrower who is just on the limit of the DTI.
If you have any questions about the changes, or USDA home loans, give Steve Jeppesen a call at 1-800-993-1947.

Florida USDA Home Loans

Florida USDA home loans are available in most counties in Florida. Outside of the major cities and their counties, you can find a home close to most places in the state.

Here's the list of counties that are not eligible for USDA home loans in Florida:

• Duval
• St. Johns
• Seminole
• Orange
• Pinellas
• Hillsborough
• Broward
• Monroe
• Miami Dade

That's leaves most of the state wide open. Remember, USDA loans are not restricted to agricultural or what we might consider rural areas. If you are looking for a no money down or low money down mortgage be sure to check out USDA loans. Call Steve Jepessen at 1-800-993-1947 to learn more or apply.

Common Questions About USDA Home Loans

USDA home loans can be especially appealing to home buyers living in eligible towns and counties. Surprisingly, not all USDA eligible homes are in rural areas. Check with a USDA home loan lender for more information and changes because requirements and rate change regularly.

Can You Really Get a No Money Down USDA Loans?

Yes, it is possible. If both you, the buyer, and the property are eligible for USDA home loans, you could make a no money down purchase.

Are USDA Loans Only for Rural Properties?

No, United States Department of Agriculture home loans are not restricted to farm, rural or properties. Single-family condos and homes in eligible areas may be bought provided the buyer and property meet requirements.

What Types of Loans Does The USDA Progam Offer?

The USDA offers 30 year fixed rate mortgages. As much as 3.5% more than the home aprraised value can be borrowed. The added 3.5% can cover closing costs, reducing the total amount of cash needed to buy the property.

Can USDA Loans Be Used for All Homes?

No. The borrower must intend to make the single-family home their primary residence. Condos can also be purchased using USDA home loans, but all homes purchased using USDA loans have got to be in an eligible area.

What Are Eligibility Maps and Eligible Areas?

The areas are determined by the USDA. You can see if your area is eligible by checking out USDA eligibility maps.

What is the Maximum Amount I Can Borrow?

How much you can borrow for a USDA mortgage will be based on your income and debt. The USDA sets the income requirements and maximum loan amounts and can be difficult to determine. It's best that you contact a USDA lender to help you determine your eligibility and maximum loan amount.

Who is Eligible for USDA mortgages?

The fundamental necessities for USDA home loans include:

Acceptable credit history (usually not as severe as conventional loans).
The home must be in an eligible area.
Income cannot be more than 115% of the average income of the borrower's area.

Are USDA Home Loans a Good Option For You?

First, unlike USDA loans, 100% conventional loans are extremely difficult to secure and USDA Mortgages can be 100% of the purchase price.
No mortgage insurance is necessary for USDA loans. Conventional loans and FHA loans are expected to require mortgage insurance at a high monthly cost.
USDA mortgage interest rates are very competitive, so even with a 100% mortgage, monthly payments can still be very affordable.

USDA home loans are a good option for those who live in eligible regions and who qualify for the program.

USDA Home Loans - No Money Down Loans

USDA Home Loans - No Down Payment?

So you want to buy a home but you don't have the down payment. What can you do? The 20% down and high credit score required by conventional lenders is just too much for you. That's not going to work. You can save or find some other way to get the 20%, but it may still be tough.

The best way today to get a mortgage is through a government funded program. These programs include FHA which require a 3.5% down payment, and VA loans that require current or past military service to qualify. These are good programs and can be the answer for some, but others will still be left out.

What About USDA Loans?

USDA loans are primarily used to assist low-income people or households purchase homes in rural areas. Funds can be used to build, repair, refurbish or move a home, or to pay for and prepare sites, including providing water and sewage services. Applicants for loans can have an income of up to 115% of the median income for the region. Families must be without adequate housing, but be able to afford the mortgage payments, together with taxes and insurance.  In addition, applicants must have acceptable credit histories. You do need to intend to live in the home for a USDA mortgage.

USDA Loans Are Not Just Rural

A USDA mortgage is for rural areas, but you will be astonished by what a rural locale can mean. Palm Coast Florida is in the fastest growing counties in Florida over the past decade. It is between Ormond Beach and St. Augustine. Homes in Palm Coast and the close by towns of Pierson and Bunnell are eligible. These may not seem like agricultural areas, but they're close to major population centers. In many big cities, there are suburban areas that are eligible. Don't presume your area is not eligible - check it out.

Are You Eligible for a USDA Home Loan?

If you're going to be eligible for one of these loans, your income can't exceed 115% oof the median income for the area of the home. You're going to need a decent credit score, probably over 600. You're going to need to prove that you can make mortgage payments, therefore your debt can't be too high.

No Down Payment - No Closing Cost

It may seem to good to be true, but you might be moving into a new home without any money out of your pocket. USDA loans can be for more than 100% of the homes appraised value. That means your closing costs could be included in the mortgage.

What To Do Now?

You need to contact a USDA Home Loans specialist to understand more. They're up to date on present requirements and upcoming changes. They can help you decide if you're eligible and loan amount.