How long is USDA Process?

[queen_britt2003]

Hey Everyone!

Generally, how long is the USDA process for securing a loan?  I want to time my application so that closing happens after June 6 (my son's last day of school)..  Any ideas or input would be appreciated.

[DanTheMan77]

Are you doing USDA direct or guaranteed? I am doing direct and it took about 30 days to get pre-approval after submitting the application. Closing will likely be 45-60 days from when you have a signed contract, longer if funding is not available. Others have more experience with guaranteed and will likely chime in soon.

[queen_britt2003]

Honestly, I do know the difference between the two.  I just learned of this program within the 2 weeks & haven't been able to do much research.

[DanTheMan77]

You apply for a Direct loan directly through the USDA. A guaranteed loan is applied for though a typical bank/lender and is guaranteed by the USDA. Direct can take 60 days or more depending on funds availability. Guaranteed will add anywhere from 2-30 days to a conventional loan process. Direct has lower income caps than Guaranteed, but will also give you a lower interest rate. Besides that, the differences are as follow:

Guaranteed Housing Loans

Eligibility: Applicants for loans may have an income of up to 115% of the median income for the area. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance. In addition, applicants must have reasonable credit histories.

Approved lenders under the Single Family Housing Guaranteed Loan program include:

Any State housing agency; Lenders approved by: HUD for submission of applications for Federal Housing Mortgage Insurance or as an issuer of Ginnie Mae mortgage backed securities; the U.S. Veterans Administration as a qualified mortgagee; Fannie Mae for participation in family mortgage loans; Freddie Mac for participation in family mortgage loans; Any FCS (Farm Credit System) institution with direct lending authority; Any lender participating in other USDA Rural Development and/or Farm Service Agency guaranteed loan programs.

Terms: Loans are for 30 years. The promissory note interest rate is set by the lender. There is no required down payment. The lender must also determine repayment feasibility, using ratios of repayment (gross) income to PITI and to total family debt.

Standards: Under the Section 502 program, housing must be modest in size, design, and cost. Houses constructed, purchased, or rehabilitated must meet the voluntary national model building code adopted by the state and HCFP thermal and site standards. New Manufactured housing must be permanently installed and meet the HUD Manufactured Housing Construction and Safety Standards and HCFP thermal and site standards. Existing manufactured housing will not be guaranteed unless it is already financed with an HCFP direct or guaranteed loan or it is Real Estate Owned (REO) formerly secured by an HCFP direct or guaranteed loan.

Direct Housing Loans

Purpose: Section 502 loans are primarily used to help low-income individuals or households purchase homes in rural areas. Funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities.

Eligibility: Applicants for direct loans from HCFP must have very low or low incomes. Very low income is defined as below 50 percent of the area median income (AMI); low income is between 50 and 80 percent of AMI; moderate income is 80 to 100 percent of AMI. Click here to review area income limits for this program. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance, which are typically 24 percent of an applicant's income. However, payment subsidy is available to applicants to enhance repayment ability. Applicants must be unable to obtain credit elsewhere, yet have reasonable credit histories.

Terms: Loans are for up to 33 years (38 for those with incomes below 60 percent of AMI and who cannot afford 33-year terms). The term is 30 years for manufactured homes. The promissory note interest rate is set by HCFP based on the Government’s cost of money. However, that interest rate is modified by payment assistance subsidy.

Standards: Under the Section 502 program, housing must be modest in size, design, and cost. Modest housing is property that is considered modest for the area, does not have market value in excess of the applicable area loan limit, and does not have certain prohibited features. Houses constructed, purchased, or rehabilitated must meet the voluntary national model building code adopted by the state and HCFP thermal and site standards. Manufactured housing must be permanently installed and meet the HUD Manufactured Housing Construction and Safety Standards and HCFP thermal and site standards.

[queen_britt2003]

Thanks so much! I'm going to discuss with my realtor.

[rideswithchrist1]

Guaranteed is a USDA loan that is made through an approved lender and guaranteed by the USDA

DIRECT comes directly from the USDA (Government) and can have your APR subsidiesed down to 1% depending on your income (very low-low income)

In our area, we have been out of funding at least since November. I know that funds will be replenished in the next month since the budget was approved, but that does not mean there will be enough for us, we are 30th in line. SO Guaranteed takes the normal 30-90 days and Direct can be anywhere from 60 days to a year if there is no funding. And your local office can't tell you WHEN they will be funded, they just give an estimate. We are on the wait list and have to let them know we are still interested in the program if we are still waiting after 6 months. I was told they expect to clear 50 people each year and that was before the budget was increased, so we are hoping to be funded by the end of summer!