USDA Loans

• Minimum loan amount $50,000, Maximum loan amount $726,200.
• No down payment required up to a loan amount of $726,200.
• Minimum middle credit score 620 a regular stick-built home. Mobile Homes are acceptable for a USDA mortgage, minimum middle credit score 660, the home must be brand new or less than 12 months old when the mortgage closes.
• Income restrictions apply for every county, the income maximum is for the entire household including any dependents that have income.
• Income requirements- The buyer(s) must provide a 2-year history, the buyers cannot have more than 3 employers in the past 2 years. Enrollment in a secondary or primary school program counts towards the 2-year history. A gap in employment of more than 60 days usually is not accepted unless there are documented reason(s).
• USDA mortgages must be approved by the lender and then sent to the regional USDA underwriting department for USDA approval, a 60-day contract is required because of the additional underwriting requirement. Hourly or salaried employees if they are starting with a new employer must have been on the job for a minimum of 30 days prior to closing, the only exceptions are if the employee is transferring locations with the same employer, or if the employee has a signed offer letter from the new employer. 30 days consecutive pay stubs and the last 2 years W2’s and tax returns are required.
• W2 employees that receive more than 20%oftheir annual income as commissions, or bonuses must supply federal tax returns, and any employment related deductions will be counted against current income.
• If the buyer(s) own more than 20% of a business that files a separate return, the last 2 consecutive returns for the business must be provided, and the federal returns of the individual must be provided.
• Self-employed buyers must have 2 consecutive years of federal tax returns proving the self-employment. A year-to-date profit & loss statement must be provided and if the P & L income is less than the average of the tax returns the lowest income will be used.
  • Self-employed buyers with credit score above 740 may be allowed to only supply 1 year of self-employed tax returns, 2-year(s) proof of the business entity is required, the automated underwriting system must indicate that only 1 year tax returns are required.

 

USDA Fact VS Fiction

A minimum credit score of 640- False lenders set their own guidelines, our minimum middle score 580!

USDA maximum debt to income ratio 41%- False lenders set their own guidelines,

• USDA will allow up to 48% debt ratio with compensating factors

USDA doesn’t allow manufactured/mobile home Mortgages – False USDA allows manufactured/mobile home Mortgages if the home is brand new or less than 12 months old!

 

These are just a few of the reasons that you need to speak to a mortgage broker that is licensed with multiple Lenders, several that do not have any overlays!