USDA RURAL DEVELOPMENT

WHAT IS RURAL DEVELOMENT? Census-based Census-based US Department of Agriculture US Department of Agriculture Guaranteed against loss by USDA Guaranteed against loss by USDA Pays lender if borrower defaults Pays lender if borrower defaults

WHO CAN DO USDA LOANS? Approved lender with HUD, VA, Fannie Mae or Freddie Mac Approved lender with HUD, VA, Fannie Mae or Freddie Mac State Housing Agency State Housing Agency Farm Credit Service Farm Credit Service

IT’S THE GOVERNMENT! Pays for itself – doesn’t use taxpayer money Pays for itself – doesn’t use taxpayer money Funded through the 2% Funding Fee Funded through the 2% Funding Fee (which can be financed into the loan!) (which can be financed into the loan!)

LOAN PURPOSE Purchase new construction Purchase new construction Purchase existing home Purchase existing home Refinance (only if currently have a direct Rural- Development Loan) Refinance (only if currently have a direct Rural- Development Loan) Purchase Mobile Home (very limited; difficult) Purchase Mobile Home (very limited; difficult)

REASONS TO NOT USE RURAL DEVELOPMENT FOR A BUYER Geographical Limitations Geographical Limitations Maximum Income limitations Maximum Income limitations Can’t buy house with in-ground pool (can try for exception to this) Can’t buy house with in-ground pool (can try for exception to this) Primary Home Only Primary Home Only

INCOME QUALIFICATIONS Household adjusted annual income cap uses ALL occupants whether on the loan or not, that are 18 and over Household adjusted annual income cap uses ALL occupants whether on the loan or not, that are 18 and over Counts gross income, overtime, commission, bonuses, net self-employment income, Social Security, Child Support, unemployment, etc. Counts gross income, overtime, commission, bonuses, net self-employment income, Social Security, Child Support, unemployment, etc. Based on family size & county where property is located Based on family size & county where property is located

ADJUSTMENTS TO INCOME $480/Year per minor or full-time student $480/Year per minor or full-time student Verified child care expenses Verified child care expenses $400/Year if borrower or co- borrower is over 62 or disabled $400/Year if borrower or co- borrower is over 62 or disabled

Counties 1- person 2- person 3- person 4- person 5- person 6- person 7- person 8- person All Florida & Virgin Island Counties EXCEPT those listed below* 49,55056,60063,70070,75076,40082,05087,75093,400 Clay, Duval, Nassau and St. Johns 51,40058,75066,10073,45079,35085,20091,10096,950 Collier56,20064,25072,25080,30086,70093,15099,550106,000 Palm Beach 55,70063,65071,60079,95085,90092,30098,650105,000 Gadsen, Jefferson and Leon 50,00057,15064,30071,45077,15082,90088,60094,300 Okaloosa50,85058,10065,40072,65078,45084,25090,10095,900 * Broward, Pinellas and Monroe are NOT eligible

GEOGRAPHICAL QUALIFICATIONS ALL of Walton County ALL of Walton County Destin Destin Niceville Niceville Valparaiso Valparaiso Crestview Crestview West of Hurlburt in Okaloosa County West of Hurlburt in Okaloosa County ALL of Santa Rosa County ALL of Santa Rosa County

GEOGRAPHICAL LIMITATIONS FT. WALTON BEACH &SHALIMAR DO NOT QUALIFY

BENEFITS TO BUYERS Can finance 102% of appraised value, without getting cash back at closing (can get EMD, but no more) Can finance 102% of appraised value, without getting cash back at closing (can get EMD, but no more) No Monthly Mortgage Insurance No Monthly Mortgage Insurance 30-Year fixed rate with very competitive rates 30-Year fixed rate with very competitive rates No loan limits (DTI/income limitations) No loan limits (DTI/income limitations) Closing costs can be financed Closing costs can be financed Unlimited gift or seller contributions Unlimited gift or seller contributions No reserves required No reserves required

Sales Price: Appraisal: Seller Paying: EMD: Closing/Prepaids 2% Funding Fee: $100,000 $110,000 $0 Closing Costs $500 $3,000/$2,000 $2,000 Can Finance: $107,000 and get $500 EMD back

Sales Price: Appraisal: Seller Paying: EMD: 2% Funding Fee: $100,000$105,000 ALL Closing/Ppds. $500$2,000 Can Finance: $102,000 and get $500 EMD back

QUALIFYING Debt to Income Ratios = 29/41 Debt to Income Ratios = 29/41 Debt to Income Ratios = 31/43 Debt to Income Ratios = 31/43 (for homes built after January, 2001) (for homes built after January, 2001) Can go higher on DTI w/compensating factors: Can go higher on DTI w/compensating factors: 660+ Credit Score 660+ Credit Score Zero or very little payment shock Zero or very little payment shock 2+ years continuous employment at same job 2+ years continuous employment at same job Rental/Housing history for 12 months required if credit score 619 or less (cancelled checks); if 620 or higher, not required Rental/Housing history for 12 months required if credit score 619 or less (cancelled checks); if 620 or higher, not required

OTHER CRITERIA Do not own a dwelling currently Do not own a dwelling currently Lack sufficient resources to secure conventional credit Lack sufficient resources to secure conventional credit US Citizen, Permanent Resident, Resident Alien, or Qualified Alien US Citizen, Permanent Resident, Resident Alien, or Qualified Alien Have legal capacity to enter contract Have legal capacity to enter contract Primary Residences Only Primary Residences Only

PROPERTY ELIGIBLITY Must have access from a street, road or driveway Must have access from a street, road or driveway Site value less than or equal to 30% of total value Site value less than or equal to 30% of total value Leasehold estates (where applicable) Leasehold estates (where applicable)

OTHER PROPERTY REQUIREMENTS If on a well & septic, must be tested and meet county requirements If on a well & septic, must be tested and meet county requirements Pest inspection required – deficiencies must be corrected Pest inspection required – deficiencies must be corrected Escrow for repairs under certain limited circumstances and will be 150% of cost Escrow for repairs under certain limited circumstances and will be 150% of cost New construction – must have warranty New construction – must have warranty

FUNDS AVAILABLE RD has annual amount of funds appropriated by Congress RD has annual amount of funds appropriated by Congress Funds must be reserved by the lender but can’t be until there is a fully- executed sales contract Funds must be reserved by the lender but can’t be until there is a fully- executed sales contract Reservation is valid for 60 days Reservation is valid for 60 days Have been known to run out before end of fiscal year Have been known to run out before end of fiscal year

QUESTIONS?