102% USDA Home Loan Program
(*Rural Development Loan, Rural Home Loan, USDA Loan, Rural Development Guaranteed Rural Housing, Rural Housing Loan)
- 102% financing based on appraised value – rather than based on purchase price. (could allow a certain amount to be financed toward home repairs)
- 30 Year Fixed Rate Mortgage
- Refinance: Yes – rate reduction only – no cash back. Only GRH and 502 direct loans)
- MI – No monthly mortgage insurance. Upfront guarantee fee of 2%.
- Reserves: No payment reserves
- Downpayment: No down payment
- First Time Homebuyer – No first time home buyer requirement
- Seller Concessions – No Maximum – over 6% requires comment from appraiser
- Gifts – 100% gifting permitted. Donor must be disinterested third party
Debt to Income Ratio
- Ratios – 29/41 – exceptions encouraged with compensating factors and RD concurrence
- Non-occupant Co-borrower: Non-occupent co-borrowers not permitted unless approved by RD
- Installment Debt – Include all installment debt greater than 6 months
- Primary Income – Two-year history
- Self-employment – Two years 1040’s and P&L
- Alimony/child support – 12 month history with proof of 3 years continuance
- Part time, Overtime & Bonus – 12 month history
- Disability benefits – Benefits letter, 3 years continuance and gross up 125%
- SSI benefits – Awards letter or 2 months bank statements, 3 years continuance and gross up 125%
- Salary increases – Salary increases within 60 days of the first payment due date are acceptable
- Maximum Income – US RD Moderate Income Limits
Credit Score – No minimum credit scores
Late payments – 1 x 30 permitted in last 12 months with explanations – Exceptions may be granted with 620 or greater middle credit scores
Bankruptcy / Foreclosure – Chapter 7 and 13 must be discharged for 3 years – Foreclosures must be completed 3 years ago – exceptions may be granted with 620 or greater middle credit scores.
Collections – Accounts cannot have been placed in collection status within the last 12 months – Exceptions may be granted with 620 or greater middle fico scores.
Judgements – Must be paid off for at least 12 months – Exceptions may be granted with 620 or greater middle fico scores.
Verification of Rent – If middle credit score is lower than 620 a VOR is required for the most recent 12 months.
Previous Housing Payment – not required
Non-traditional credit – Acceptable if no credit is available
Credit report – RMCR or Tri-Bureau merged
Homebuyer education – Case by case or when required by RD
*various terms are used in reference to the 102% USDA Home Loan, however, the loan referenced in this post is the 102% usda loan by the USDA – Rural Development Guaranteed Rural Housing Home Loan Program.