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| Begonia in my yard blooming in blue pot |
USDA Mortgage can help you buy an owner
occupied home with no down payment!
Cash reserves are not required
The minimum FICO score requirement 640.
This mortgage loan
is also easy on the credit items:
·
Foreclosure or deed-in-lieu of foreclosure
allowed after three years from completion
·
Outstanding tax liens or
delinquent government debt with no satisfactory arrangements
·
No court-created or
affirmed obligation (judgment) caused by nonpayment that is currently
outstanding or has been outstanding within the last 12 months.
·
Two or more rent payments paid 30 days or more
past due within the last 3 years
·
Accounts which have been converted to
collections within the last 12 months (utility
·
bills, hospitals bills, etc.)
·
Collection accounts outstanding, with no satisfactory
arrangements for payments, no
·
matter what their age as long as they are
currently delinquent and/or due and payable.
·
The lender is responsible to determine what
collection accounts, if any, should be paid
·
in full by the applicant prior to or at closing
based upon the strength of the credit profile.
·
Evidence of meaningful financial reserves and if
the accounts have the potential to
·
affect the lien position or diminish the
borrower’s equity must be considered.
·
Any debts written off within the last 36 months.
·
·
A bankruptcy in which applicant was discharged
more than 36 months before
·
application
·
A satisfied judgment completed more than 12
months before the date of mortgage application
·
_ The lender may consider
mitigating circumstances to establish the borrower’s intent for
· USDA mortgages accept weaker credit than FHA and case by case when the applicant provides
documentation that:
·
The circumstances were of a temporary nature,
were beyond the applicant’s control,
·
and have been removed (e.g., loss of job; delay
or reduction in government benefits or
·
other loss of income; increased expenses due to
illness, death, etc.); or
·
The adverse action or delinquency was the result
of a refusal to make full payment
·
because of defective goods or services or as a
result of some other justifiable dispute
·
relating to the goods or services purchased or
contracted for.
·
_ A 24-month history of
residency is required on all files.
·
_ Non-purchasing spouse in
Community Property States: Except for obligations specifically
·
excluded by state law, the debts of NPS must be
included in the applicant’s qualifying ratios when
·
the applicant resides in a community property
state or the property guaranteed is located in a
·
community property state. The NPS credit history
is not considered a reason to deny a loan
·
application. However, the NPS obligations must
be considered in the debt-to-income ratio unless
·
excluded by state law. A credit report must be
obtained for the NPS in order to accurately
·
determine the debts that must be counted in the
total debt ratio.
·
_ Community property states
include: Arizona, California, Idaho, Louisiana, Nevada, New
·
Mexico, Texas, Washington and Wisconsin.
·
_ If borrower is legally
separated in a community property state, the Legal Separation
·
Agreement signed by the judge is accepted the
same as a divorce decree.
·
_ If the non-borrowing spouse
has no Social Security number, due diligence must be
·
completed to assure that indeed there is no SS#
assigned. Indications may show up on the
·
tax transcripts or other misc. documentation in
the file. The required credit report is run with
·
only zero’s (0) in the SS# fields. It is not
acceptable to run the credit report using an ITIN
·
number.
_ Short
Sales: Evaluation of a borrower’s creditworthiness for borrower(s) who have
pursued a
short sale
Collections: Underwriter
discretion as to whether they will be required to be paid off or not. Must
not affect first
lien position and cannot affect the ability to repay the mortgage debt. If the
Underwriter
determines
collection accounts may remain open, they must document an adverse credit
waiver
and addressing the
circumstances surrounding each collection account; specifically,
that the situation
was temporary in nature, and beyond the mortgage applicant’s control.
_ Child
care expenses are not required to be considered as a recurring liability when
calculating
debt-to-income
ratios. Child care expenses are utilized to calculate the adjusted gross income
in
determining mortgage
program eligibility.
Declared Disaster Areas _ From time to time, FEMA announces
counties that are affected by natural disasters. For example after the Laguna
Beach fire of 1993.
Certain areas of Orange County that are
within the scope of this type of mortgage such as Silverado Canyon and Trabuco
Canyon.
Property
must be located in a rural area as defined by the RHS
o Populations of 10,000 or fewer
o Populations up to 20,000 if located outside a Metropolitan
Statistical Area (MSA)
_ To determine if a property is located in a designated rural area,
visit the RHS Web site at:
http://eligibility.sc.egov.usda.gov/eligibility/. Click on “Single Family Housing” under
“Property
Eligibility”.
oBorrowers adjusted income may not exceed 115% of the Area Median Income (AMI)
_ To determine the income and eligibility limits, the following
website walks through the household
members,
income, etc. and determines if it fits within the 115% requirement:
http://eligibility.sc.egov.usda.gov. Click on “Guaranteed” under “Income Limits”.
