01-03-2009 07:51 PM
01-03-2009 08:49 PM - edited 01-03-2009 08:53 PM
Pretty exciting stuff, isn't it??!!
As I understand it, the USDA first issued an advanced notice announcing
the income changes back on April 10th, 2008. The notice stated that the
changes would go into effect on January 20th, 2009, but any adverse comments
( i.e. formal objections to the amended income limits ) must be filed by
Monday, January 5th, 2009. As you know, that's only 2 days from now.
So stay in close contact with your Lender between now and Monday.
If no formal objections are filed, the new income limits go into effect on
January 20th (Inauguration Day) as planned.
And just so everyone else who might be interested in a USDA home loan
knows what we're talking about, here's the deal:
Qualifying income limits for USDA home loans are going up due to the
dramatic increases in home values over the last several years.
For households with 1 to 4 people, the new qualifying income is a
maximum of $70,750 (which is the 4 person limit).
For households with 5 to 8 people, the new qualifying income is a
maximum of $93,400 (which is the 8 person limit).
USDA loans have very attractive rates, ranging from 5.3 to 5.99%
for a 30year fixed rate mortgage. USDA loans are 100% financing.
The only other government-backed mortgage product offering 100%
financing is a VA loan.
So to make a long story short, you'll have to sweat it out for another
48 hours, theoutsider. But this is GREAT news for anyone interested
in these loans.
Hope this helps. Enjoy the weekend!
p.s. For anyone currently in the process of buying a home with a
USDA loan, it might be best to push back your closing until after
January 20th, 2009 in order to take advantage of the higher income limits...
"The right attitude is everything"
01-04-2009 12:28 PM
My USDA rep said it was just a formality.... will go thru
01-04-2009 09:01 PM
- last edited on
Thanks DallasLoanGuy, but I called "Mr. X" with Rural Housing in Washington DC today and he said that the income limits increase had been bumped to March 20th 2009.... Do you think he misunderstood me? Income limits increase and 2-tier income structure are 2 different things. I'm more interested in the later since I am about $3000 from qualifying! He mentioned something about not enough funds. I;ve tried to get back in touch with him, but he must be busy. Do you have any contacts.... I'm going crazy! My new home purchase pretty much depends on getting this loan. Once again, I'm interested in the implementation of the 2-tier income structure (1-4 person family and 5-8 person family) We fall under the 5 person family and the change in policy would make us ready to go on January 20th 2009, if the change will actually take place. Any help would be appreciated! Stressing in NC!
Edited to remove name. Please refrain from posting personally identifiable information, whether it's yours or anyone else's, in the fora.
01-07-2009 01:04 PM
I just got an email from my mortgage broker about 30 minutes ago.
She confirmed that funding for USDA loans has been temporarily suspended
until March 20th, 2009.This also means that the income limit modifications
will not go into effect until that time as well.
She also expressed hope that the funding problem will be resolved
before then, as USDA loans are growing in popularity due to the low
fixed rates and 100% financing.
However, she didn't say anything about the USDA being "out of money".
It's just the funding for the Section 502 Rural Housing loans that are
So for all of you in the market for a home using a USDA loan, please stay
tuned. Maybe we'll get lucky and funding will occur before March...
"The right attitude is everything"
01-07-2009 01:12 PM
It depends on the bank - some banks will continue even though USDA has announced they anticipate running out soon. they will just the loan at a later date since they know eventually the funds will be there.
I got a memo yesterday saying there would be no interu[ption in service- I am grateful as this is in my opinion the best program out there.
01-07-2009 01:25 PM
Just to clarify a bit....
There are 2 different single family programs:
Direct Loan Program (Section 502)
Under the Direct Loan program, individuals or families receive direct financial assistance directly from the Housing and Community Facilities Programs in the form of a home loan at an affordable interest rate.
Most of the loans made under the Direct Loan Program are to families with income below 80% of the median income level in the communities where they live. Since HCFP is able to make loans to those who will not qualify for a conventional loan, the HCFP Direct Loan program enables many more people to buy homes than might otherwise be possible. Direct loans may be made for the purchase of an existing home or for new home construction.
Loan Guarantee Program (Section 502)
Under the Guaranteed Loan program, the Housing and Community Facilities Programs guarantees loans made by private sector lenders. (A loan guarantee through HCFP means that, should the individual borrower default on the loan, HCFP will pay the private financier for the loan.) The individual works with the private lender and makes his or her payments to that lender.Under the terms of the program, an individual or family may borrow up to 100% of the appraised value of the home, which eliminates the need for a down payment. Since a common barrier to owning a home for many low-income people is the lack of funds to make a down payment, the availability of the loan guarantees from HCFP makes the reality of owning a home available to a much larger percentage of Americans.
If the OP is applying for the GUARANTEED program, then the money is no issue...the money comes from your choice of lenders.
The DIRECT program is where the money comes from the USDA directly.
Hope that helps a bit.
We are finally homeowners!!
Closed May 5th-30 yr fixed at 5.25%.
01-07-2009 01:36 PM - edited 01-07-2009 01:39 PM
That's an excellent point, Brian. Thanks for bringing it up.
Depending on the lender, people can still apply for USDA loans at
their local bank, credit union, etc. But they won't be able to close
until Section 502 funding resumes on/about March 20th, 2009.
Banks have the money, but the USDA must guarantee the loan.
And for people making offers on homes, they can make them
contingent on USDA financing. At least this way the offers will
be in the pipeline and ahead of everyone else who's just looking
but not serious....
"The right attitude is everything"
01-07-2009 01:44 PM
good to know. My LO just told me today that the government has to reauthorize the money and I posted a question about it.
In addition I ask about the bankruptcy criteria. On the specs website (Michigan) it stated 3 years discharge for chapter 7 AND chapter 13. I am getting my discharge for chapter 13 and am HOPING that I can apply for USDA. BK was FILED in August 05 but won't be discharged until late Feb/early March.