FHA, VA and Rural Development??

8/29/2007 Atlanta, GA

I hear everyone in the mortgage business saying if you don't know FHA and VA, you're going to be out of the business soon, but I have discovered that we do a loan that seems to be the best kept secret in the world of finance . . . the Rural Development Loan which is guaranteed by of all people, the USDA.

From the USDA Website:

The purpose of this program is to assist moderate income (up to 115 percent of median income) households in obtaining modestly priced housing by providing them with the first opportunity for home-ownership. This program encourages lenders to provide financing to qualified applicants by reducing the amount of risk involved.

Important Points:

• There is no loan limit for this program. There are income limits and ratios, which will limit your loan size by default.
• No downpayment is required. In some cases, closing costs can be rolled into the loan. The loan is relative to the appraised value!
• Loan terms are for 30 years (no exceptions).
• Repayment ratios are set at 29/41%. There is some wiggle room here, with compensating factors,
• Because of the USDA guarantee on these loans, homeowners pay no monthly mortgage insurance premium.
• AND!! No minimum credit score is required for creditworthiness.

Sign me up! No credit score?, 100%, plus closing costs in come cases?, NO MI? Reasonable interest rates?

You can even do some rehab if the value is there . . . so for those people who want to buy a foreclosure with no stove and no carpet, this is the ticket.

There are some constraints . . . you knew that was coming, didn't you?

There are THERMAL requirements: See the very end of this page for Georgia particulars. Alabama, Florida, South Carolina and Tennessee are available as popups from these links.

No credit score is not the same as bad credit . . . there are cases where some bad credit can be overlooked, but if it is all bad, it is a no go.

They are limited geographically, to not highly populated areas. For instance, in Georgia, they are not available in Cobb County, but they are availble in limited parts of Bartow, Paulding, Cherokee, and Forsyth counties.

You can look at the maps or check to see if a property address is in an eligible area of Georgia.

In the meantime, I'd be looking for properties just on the outskirts of the designated areas, not so far out that I wouldn't want to live that far away, but far enough that the property qualifies for this program. It is the only decent 100% program left . . . and NO MI, so they are cheaper than FHA.

THERMAL REQUIREMENTS FOR GEORGIA

For counties above the fall line

Baldwin, Banks, Barow, Bartow, Butts, Caroll, Catoosa, Chattooga, Cherokee, Columbus, Coweta, Dade, Dawson, Douglas, Elbert, Fannin, Floyd, Forsyth, Franklin, Fulton, Gilmer, Glascock, Gordon, Greene, Habersham, Hall, Hancock, Haralson, Hart, Heard, Henry, Jackson, Jasper, Jones, Lamar, Lincoln, Lumpkin, Madison, McDufie, Meriwether, Monroe, Morgan, Muray, Newton, Oconee, Oglethorpe, Paulding, Pickens, Pike, Polk, Putnam, Rabun, Spalding, Stephens, Taliafero, Towns, Troup, Union, Upson, Walker, Walton, Waren, White, Whitfield, Wilkes

R-30 in the ceilings
R-19 under crawl spaces/basements/garages
Storm windows or thermo-pane windows
Storm doors or Insulated doors
For counties below the fall line

Appling, Atkinson, Bacon, Baker, Ben Hill, Berrien, Bibb, Bleckley, Brantley, Brooks, Bryan, Bulloch, Burke, Calhoun, Camden, Chandler, Charlton, Chatham, Chattahoochee, Clay, Clinch, Cofee, Colquitt, Cook, Crawford, Crisp, Decatur, Dodge, Dooly, Dougherty, Early, Echols, Effingham, Emanuel, Evans, Glynn, Grady, Haris, Houston, Irwin, JefDavis, Jeferson, Jenkins, Johnson, Lanier, Laurens, Lee, Liberty, Long, Lowndes,Macon, Marion, McIntosh. Miller, Mitchell, Montgomery, Peach, Pierce, Pulaski, Quitman, Randolph, Schley, Screven, Seminole, Stewart, Sumter, Talbot, Tattnall, Taylor, Telfair, Terrell, Thomas, Tift, Toombs, Truetlen, Turner, Twiggs, Ware, Washington, Wilcox, Wayne, Webster, Wheeler, Wilkinson, Worth

R-26 in the ceilings
R-13.5 under crawl spaces/basements/garages
Storm windows or thermo-pane windows
Type I exterior door