cancel
Showing results for 
Search instead for 
Did you mean: 

USDA-How much $ do we need

Frequent Contributor

USDA-How much $ do we need

We are hoping to buy via USDA Guranteed with closing cost, upfronts and downpayment rolled into the loan. I do understand that the house will need to appaise for enough to include those. Before we even begin looking or talking to banks, how much money should we have on hand to even be considered with the above in mind?

 

Some background-Previously we planned on conventional or FHA but my husband was out of work for 14 months and we used all the money we had saved, including 401K, to live on during that time. Thankfully he is back to work, so once the 6 month wait period that the bank requires is over, we hope to purchase a home. 

 

Thanks!

 

( I thought I posted this but I can't find it!?)

9 REPLIES
Frequent Contributor

Re: USDA-How much $ do we need

Think 3% - 5% of purchase price, depending on where you are located. What do you mean by 6 month wait?

Mortgage Loan Officer in Greater Chicago are plus 47 states.
Message 2 of 10
Frequent Contributor

Re: USDA-How much $ do we need

We had been working with a bank before my husband lost his job. I spoke with the banker after he got his new job and she said because he had been out of work over a year he would need to have 6 months of steady employment before we could get a loan.
Message 3 of 10
Frequent Contributor

Re: USDA-How much $ do we need

His new job is in the same line of work it's just that it was an extended period of time.
Message 4 of 10
Frequent Contributor

Re: USDA-How much $ do we need


JMMD wrote:
His new job is in the same line of work it's just that it was an extended period of time.

I think the loan officer felt that it was not stable income. How did he get paid in his previos job? Break it down between salary, overtime, bonuses, commission. How does he get paid now?

Mortgage Loan Officer in Greater Chicago are plus 47 states.
Message 5 of 10
Frequent Contributor

Re: USDA-How much $ do we need


kc0039 wrote:

JMMD wrote:
His new job is in the same line of work it's just that it was an extended period of time.

I think the loan officer felt that it was not stable income. How did he get paid in his previos job? Break it down between salary, overtime, bonuses, commission. How does he get paid now?


He was a W2 salaried employee before with an annual bonus (25%). He is now W2 again but no bonus. Our income was cut 40% with the new job which is why we now qualify for a USDA loan. 

 

From the little bit of research I did, any unemployment over 6 months will require a wait period before a mortgage, even if the line of work is the same? That is what the bank officer told us too.  I didn't try a different bank though...

Message 6 of 10
Frequent Contributor

Re: USDA-How much $ do we need


JMMD wrote:

kc0039 wrote:

JMMD wrote:
His new job is in the same line of work it's just that it was an extended period of time.

I think the loan officer felt that it was not stable income. How did he get paid in his previos job? Break it down between salary, overtime, bonuses, commission. How does he get paid now?


He was a W2 salaried employee before with an annual bonus (25%). He is now W2 again but no bonus. Our income was cut 40% with the new job which is why we now qualify for a USDA loan. 

 

From the little bit of research I did, any unemployment over 6 months will require a wait period before a mortgage, even if the line of work is the same? That is what the bank officer told us too.  I didn't try a different bank though...


In my experience with government loans, FHA/VA/USDA, we would need a letter of explanation why he was out of the job for over 12 months. Underwriters are the only ones that can make that call as well. He can show proof of trying to get back to work when he was laid off (we will require a previous verification of employment) to support his letter of explanation.

Mortgage Loan Officer in Greater Chicago are plus 47 states.
Message 7 of 10
Established Contributor

Re: USDA-How much $ do we need

USDA does not require reserves. Our lender told us to ask for 6-% in closing costs and prepaids from the seller. Make sure it says "and prepaids". You will need Ernest money (depends on area) ours was $500.00 on a house with a sale price of 157,xxx.xx. We paid $350 for the home inspection and $500 for the appraisal. That was the total out of pocket we paid for the entire process. Although USDA does not require reserves the bank did use my 401k balance to show emergency funds to the underwriters and needed terms of withdrawal with that as well.

So our total out of pocket was $1350 we got $650 back at closing and showed 4000.00 in the 401k. (My husband is a state employee so also has a pension plan).
Message 8 of 10
Frequent Contributor

Re: USDA-How much $ do we need


kc0039 wrote:

JMMD wrote:

kc0039 wrote:

JMMD wrote:
His new job is in the same line of work it's just that it was an extended period of time.

I think the loan officer felt that it was not stable income. How did he get paid in his previos job? Break it down between salary, overtime, bonuses, commission. How does he get paid now?


He was a W2 salaried employee before with an annual bonus (25%). He is now W2 again but no bonus. Our income was cut 40% with the new job which is why we now qualify for a USDA loan. 

 

From the little bit of research I did, any unemployment over 6 months will require a wait period before a mortgage, even if the line of work is the same? That is what the bank officer told us too.  I didn't try a different bank though...


In my experience with government loans, FHA/VA/USDA, we would need a letter of explanation why he was out of the job for over 12 months. Underwriters are the only ones that can make that call as well. He can show proof of trying to get back to work when he was laid off (we will require a previous verification of employment) to support his letter of explanation.


Thank you. We will be prepare a LOE for the UE. 

Message 9 of 10
Frequent Contributor

Re: USDA-How much $ do we need


Firemediii wrote:
USDA does not require reserves. Our lender told us to ask for 6-% in closing costs and prepaids from the seller. Make sure it says "and prepaids". You will need Ernest money (depends on area) ours was $500.00 on a house with a sale price of 157,xxx.xx. We paid $350 for the home inspection and $500 for the appraisal. That was the total out of pocket we paid for the entire process. Although USDA does not require reserves the bank did use my 401k balance to show emergency funds to the underwriters and needed terms of withdrawal with that as well.

So our total out of pocket was $1350 we got $650 back at closing and showed 4000.00 in the 401k. (My husband is a state employee so also has a pension plan).

Thank you for the info and breakdown of what you had to pay. Unfortunately our 401Kis gone but we have $5K in the bank so we should be fine as long as we find a seller willing to put some towards closing/prepaids. 

Message 10 of 10