Confused USDA refer/eligible?

[Anonymous]

So our LO updated us on our USDA Guaranteed loan submission and it came back refer. It's being processed manually now and she seems to be positive it will be fine and not 100% sure the exact reason it came back as such. I'm not so sure myself and after reading through handbook I'm more confused and nervous.

One hurdle I see is DTI being 32/42. I know those are within the limits above the standard 29/41 BUT in the handbook it specifically says if manually underwritten applicant credit score above 680. We are 660. The compensating factors was the other requirement listed in handbook and we are fine due to having enough reserves. Can that score specifically cause a denial?

The second reason I'm thinking the refer could of popped up was a 30-60 day late back in July/August. It's confusing as it was an auto lease we turned in a few months early and as we were fighting some of the excessive charges it went to charge off. We soon after paid that in full directly to auto company and it's listed as such on credit. But of course it shows Lates even though we never were late while we had the vehicle.

Being we are expected to close in less than 60 days I doubt there is much we can do with the late as far as goodwill if it is the issue. It's frustrating because most of this information I looked into myself recently and it really never came up in early discussions with our LO as being a problem.

[NC_Mtg_Loaner]

What's the purchase price and how much do you have in reserves?

[Anonymous]

$222k

Currently 9k in reserves but will be more as still saving each month and depending on how much of 5k deposit we get back. Builder giving 7500 towards closing so might only need half of the initial 5k at close.

Estimated payment is $1672 (includes $95 HOA) with the 4.625% rate but I know it will be less than $1600 with proper taxes. They are estimated about $3700 right now but everything we have seen should put it closer to $2500. Unfortunately LO said corporate puts that higher estimate and nothing they can do.

[NC_Mtg_Loaner]

Just be prepared to go FHA and be done with it---especially if your family is attached to the property, but I hope it works out well for you. 

GUS has been awful quirky to work thru in the past year or so...

[Anonymous]

Thanks. Obviously worst case that is what we would do. Definitely not what we were looking to do. What would reserve amount or purchase price change? So at this point in your opinion not much else we can do and just hope USDA manual underwrite comes back positive?

[Anonymous]

**UPDATED 5/17**
Our LO said it was put through GUS again and got an accept! Huge relief as home is near completion.

My only question is now for those familiar with current USDA rates. Our last estimate was on May 3rd with a 4.5% rate. Since then it looks like overall rates dropped pretty significantly and have held there but our estimate today still 4.5%. I was guessing we could be 4.3% or lower at this point. Is it possibly as simple as asking LO for such a rate? Any thoughts?

[pgtackle2003]

Congrats on getting the accept! I know what a huge relief that can be. As a bit for comparison, I have the exact same middle score as you (660) and just got a FHA loan at 4.375%. I would think under USDA you could do better than 4.5% given your scores. There is no exact rate they should be offering as for each lender it can vary. It may be worth comparing to another lender as I do believe you should be able to do better than 4.5%