1. BUY WITH USDA FINANCING
BUY WITH USDA FINANCING

2. Why USDA? No Maximum Loan Amount Low Upfront Guarantee Fee 1%
Why USDA?
No Maximum Loan Amount
Low Upfront Guarantee Fee 1%
Low Annual Guarantee Fee .35%
Purchase/Rate and Term
Streamline Refi – no appraisal – no debt ratio
SFR, Condos, PUD – no units
No FTHB requirements

3.
USDA LENDING
640 FICO (620 exception case by case manual underwrite 29/41%)
No gifts for reserves
MCC’S can be used to reduce PITI
Requires GUS AUS approval
Cash out not allowed
Income Limits apply
Owner Occupied – no non-occupant co-buyers
Property must be located in rural designated area – no working farms
Guest in-law permitted as long as it isn’t considered a 2 unit per zoning or use
Pools okay
Manufactured Homes okay only if you have a current USDA

4.
Things to know
29/41 ratios are ‘standard’.  We have seen GUS approve ratios as high as about 34/46 with good credit AND 1-3 month’s reserves.  However if there are ANY debts that are not on the credit report, the file has to be manually downgraded and must have 29/41 ratios Max.
Assets are a little different. The Underwriter has to calculate and use a 60 day average balance from bank statements. Also on 401K’s, IRA’s etc., we can use 60% of the vested interest for reserves, HOWEVER don’t have them take money out for reserve purposes, once removed from the 401K/IRA it can no longer be used for reserves AND has to be backed out of the 60 day average balance calculation.  Lastly gifts are NOT allowed to be used for reserves, but can be used for closing costs.
The only special form to be obtained by processing is the form. It needs to be accurate and complete for us to run the GUS accurately.
USDA requires a property to be in a more rural area. So the first thing to always do when prequalifying a deal is to check that.
If borrowers have enough assets to qualify for an 80% loan, they will be rejected.

5.
USDA has it’s own LOAN APPLICATION Request for Single Family Housing Loan Guarantee Form Rev 12-14
Loan Application can be found at essexwholesale.com under PRODUCTS tab – USDA. (This is a 7 page document.)

6.
To find property eligibility and income limits for USDA click Then click on: Single Family Housing Guaranteed

7. Find out if property is eligible. Type in an address.
Find out if property is eligible. Type in an address.

8.
After you enter an address, it will tell you if the property is eligible or not. If property is eligible, then click on Income Limits – see following screen

9.
When clicking on Income Limits it will bring you to this screen. Click on your state.

10.
After typing in the state, this will come up. Use Moderate Income Guarantee Loan

11. For more information, you can Link to the USDA Handbook
For more information, you can Link to the USDA Handbook  

12.
To submit your loan to Essex, be sure you have our complete submission forms found at essexwholesale.com under “submissions forms – USDA” , or call your Account Executive to help you with the process!

13. Important USDA links Link to Property Eligibility:
Important USDA links
Link to Property Eligibility: 
Link to Income eligibility: