Update on USDA Zero Down Rural Home Loan Program

USDA mortgages offers home buyers the opportunity to buy a home in a designated rural area with zero down payment. Area’s outside of the peach colored area in this map may be eligible for USDA zero down financing.

This program is available to borrowers who meet certain income limitations. Currently in the King County area, a household with 1 to 4 family members may qualify if their household income is $93,450 or less and $123,350 or less for households with 5 to 8 family members.

Home buyers in USDA desginated rural areas like Maltby, Vashon Island and Snoqualmie, who are depending on zero down financing have been caught in limbo with the future of the program in question. It looks like this uncertainty may almost be over.

Last week, the Senate and House approved FY 2013 Continuing Resolution which, among other things, would allow USDA loans to continue through September 2013 to current designated rural areas.

The bill awaits President Obama’s signature.

Meanwhile, we have been told by our USDA lenders that it is “business as usual” and we continue to offer this program to qualified home buyers and home owners wanting to refinance their existing USDA mortgages.

If you are interested in a mortgage rate quote for a USDA zero down loan or other mortgage programs for homes located in Washington, click here, I’m happy to help you!

Potential changes to USDA Zero Down Mortgages

USDA mortgages are available with zero down payment to borrowers under certain income limits who want to buy in a designated rural area. USDA provides maps that illustrate whether or not a geographical area is allowed to have this program. 

The maps for USDA were set to be revised late last month with revisions taking place at the end of this month have been postponed by Congress. USDA mortgages are proceeding “business as usual” until they hear otherwise from “the hill”.

usda
 

The orange areas of this map shows areas that are currently not eligible for USDA zero down payment financing.

Congress has introduced bills that would change how a rural area is defined, including increasing the population to 35,000 based on the 2010 Census which would allow more homes to be eligible for zero down USDA mortgages.

USDA loans offer very competitive rates. Just yesterday on Twitter, I shared a quote based on a USDA loan in the Maltby area in the mid 3’s for a 30 year fixed with zero down payment for a $500,000 sales price based on a family of 5. 

Twitter

If you would like a mortgage rate quote for a zero down USDA mortgage on a home located in Washington, click here.

In addition to the property being in a designated rural area, to qualify for the USDA zero down mortgage program, your household income cannot exceed the current income limits. Current household income limits for properties in King and Snohomish counties are $93,450 for a family up to 4 and $123,350 for a family of 5 to 8 members living in the home.

If you’re interested in a USDA zero down mortgage in Duvall, North Bend, Port Townsend or anywhere in Washington state, I’m happy to help you.

Updated Income Limits for USDA Zero Down Home Loans

USDA recently published updated income limits for their zero down mortgage program which is available in rural areas. Other mortgage programs, like FHA or conventional, has loan limits which limits availability. USDA does not have loan limits, the program is restricted by household income. 

USDA offers a government backed program that allows zero down payment on homes that are in a designated rural community for families earning less than a certain income. A majority of Washington State single family residences (homes and condos) qualify…of course if you live in metropolitan areas like Seattle or Bellevue, odds are your home will not. However, if you’re considering areas like Duvall, parts of Maple Valley, Vashon or Bainbridge Island, it may qualify for zero down financing.

To qualify, families must be without “adequate housing” (may not own a home or adequate home), must have reasonable credit history and be able to afford the mortgage (29/41 is the debt to income ratio guidelines).  

Income limits vary by county and the entire household income is considered (not just the primary borrowers or those borrowers on the mortgage) for determining if the income meets the guidelines.  This is separate from income considered for “debt-to-income” ratios.  USDA loans allow incomes up to 115% of the median income for the area.  Income limits vary on household size from 1-4 person or 5-8 person. 

As of the publishing of this article, in Washington, the income limits by county are:

  • King and Snohomish Counties: 1-4 Person $93,450 | 5-8 Person $123,350
  • Pierce County: 1-4 Person $82,450 | 5-8 Person $108,850
  • Island County: 1-4 Person $89,550 | 5-8 Person $118,200
  • Kitsap County:  1-4 Person $86,950 | 5-8 Person $114,750
  • Thurston County: 1-4 Person $88,900 | 5-8 Person $117,350
  • Clark and Skamania Counties: 1-4 Person $83,950 | 5-8 Person $110,800
  • San Juan County: 1-4 Person $78,050 | 5-8 Person $103,050
  • Whatcom County: 1-4 Person $80,300 | 5-8 Person $106,000
  • Benton and Franklin Counties: 1-4 Person $78,000 | 5-8 Person $102,950
  • Skagit County: 1-4 Person $78,000 | 5-8 Person $102,950
  • Asotin County: 1-4 Person $74,750 | 5-8 Person $98,650
  • All other Washington counties:  1-4 Person $74,900| 5-8 Person $98,850

You can check current USDA income limits by visiting the USDA site (clicking here)…be sure to click the “guaranteed” option.   Income limits can and do change. You can also use USDA’s income eligibility calculator which will factor in deductions to income, select the “guaranteed” results (not “direct”).

Income used to determine if a family is under the household income limits includes all those (18 years and older) who will be living in the home regardless of whether or not they’re on the mortgage.  Incomes of children over 18 who working AND who are full time students are not factored. Here is more information of how USDA loans calculate household income.

Once you’ve determined that you meet the household income limits, the next step is to see to see what communities in your area are eligible for USDA financing. You don’t have to go too far from Seattle or Bellevue to find homes that do qualify for this type of mortgage.   Using the USDA site, under “Property Eligibility” click “Single Family Dwelling”.  From there you can either enter a specific address or click on the map to narrow down your search. 

Sellers and real estate agents who are working in neighborhoods that qualify should be sure to include this program as an option they’ll consider for financing on their offers.  

This map is as of the publishing of this post. Areas that are outside of the peachy orange shade are eligible for USDA zero down home loans.

USDA Map
 

I’m pleased to offer USDA financing as an option for borrowers who meet the criteria. If you have any questions regarding USDA or other mortgage programs for financing homes located anywhere in Washington State, please contact me, I’m happy to help!  Click here for a mortgage rate quote for homes located anywhere in Washington.

Income Limits for USDA Zero Down Rural Loans

EDITORS NOTE 2/13/2013: UPDATED USDA INCOME LIMITS ARE PUBLISHED HERE.

USDA offers a government backed program that allows zero down payment on homes that are in a designated rural community for families earning less than a certain income. A majority of Washington State single family residences (homes and condos) qualify…of course if you live in metropolitan areas like Seattle or Bellevue, odds are your home will not. However, if you’re considering areas like Duvall, parts of Maple Valley, Vashon or Bainbridge Island, it may qualify for zero down financing.

To qualify, families must be without “adequate housing” (may not own a home or adequate home), must have reasonable credit history and be able to afford the mortgage (29/41 is the debt to income ratio guidelines).  

Income limits vary by county and the entire household income is considered (not just the primary borrowers or those borrowers on the mortgage) for determining if the income meets the guidelines.  This is separate from income considered for “debt-to-income” ratios.  USDA loans allow incomes up to 115% of the median income for the area.  Income limits vary on household size from 1-4 person or 5-8 person. 

As of the publishing of this article, in Washington, the income limits by county are:

  • King and Snohomish Counties: 1-4 Person $93,450 | 5-8 Person $123,350
  • Pierce County: 1-4 Person $82,450 | 5-8 Person $108,850
  • Island County: 1-4 Person $89,550 | 5-8 Person $118,200
  • Kitsap County:  1-4 Person $86,950 | 5-8 Person $114,750
  • Thurston County: 1-4 Person $86,250 | 5-8 Person $113,850
  • Clark County: 1-4 Person $83,950 | 5-8 Person $110,800
  • San Juan County: 1-4 Person $78,050 | 5-8 Person $103,050
  • Whatcom County: 1-4 Person $78,000 | 5-8 Person $102,950
  • Benton and Franklin Counties: 1-4 Person $76,800 | 5-8 Person $101,450
  • Skagit County: 1-4 Person $75,750 | 5-8 Person $100,000
  • All other Washington counties:  1-4 Person $74,950| 5-8 Person $98,850

You can check current USDA income limits by visiting the USDA site (clicking here)…be sure to click the “guaranteed” option.   Income limits can and do change. You can also use USDA’s income eligibility calculator which will factor in deductions to income, select the “guaranteed” results (not “direct”).

Income used to determine if a family is under the household income limits includes all those (18 years and older) who will be living in the home regardless of whether or not they’re on the mortgage.  Incomes of children over 18 who working AND who are full time students are not factored. Here is more information of how USDA loans calculate household income.

Once you’ve determined that you meet the household income limits, the next step is to see to see what communities in your area are eligible for USDA financing. You don’t have to go too far from Seattle or Bellevue to find homes that do qualify for this type of mortgage.   Using the USDA site, under “Property Eligibility” click “Single Family Dwelling”.  From there you can either enter a specific address or click on the map to narrow down your search. 

Sellers and real estate agents who are working in neighborhoods that qualify should be sure to include this program as an option they’ll consider for financing on their offers.  

This map is as of the publishing of this post. Areas that are outside of the peachy orange shade are eligible for USDA zero down home loans.

USDA Map
 

I’m pleased to offer USDA financing as an option for borrowers who meet the criteria. If you have any questions regarding USDA or other mortgage programs for financing homes located anywhere in Washington State, please contact me, I’m happy to help!

USDA fees increasing for 2013 effective October 1, 2012

Beginning October 1, 2012, USDA will be increasing their guarantee fee and annual fee.  USDA’s guarantee fee is much like a VA funding fee or FHA upfront mortgage insurance premium: it is a lump sum that is most often financed into the loan. The annual fee, like FHA, is paid monthly as part of the mortgage payment.

The guarantee fee for purchases will remain at 2% of the loan amount. For refinances, the guarantee fee will increase from 1.5% to 2%.

The annual fee for both refinances and purchases will increase from 0.3% of the base loan amount to 0.4% effective October 1, 2012.

USDA mortgages offer zero down financing for borrowers who meet income limits and properties in designated rural areas.

NOTE: The photo in this post reflects eligible rural areas for 100% financing using a USDA zero down mortgage. If the property is not located in an orange (or peach?) shaded area, it may be eligible to purchase with a zero down mortgage.

USDA Refinance Funds No Longer Available for 2012

We received this notice late last week from USDA:

FY 2012 refinance funds are exhausted.

At this time, we are unable to process any GRH Refinance transactions. The applications currently awaiting review by Rural Development will be returned to the lender without action.
Refinance funding will be restored in October. The new fee structure will be 2% upfront and 0.4% annually. Because of the new fee structure, any refinance applications currently with RD will have to be re-underwritten, and resubmitted for review. Lenders may submit applications for refinance (at the new rate) at any time, however, RD will not review them until funding is restored.

Please note that funding for new applications is still available and will likely remain so through the fiscal year.

USDA offers zero down financing for residential purchases in designated rural areas to families under certain income levels.  

 

Income Limits and Property Qualifications for USDA Rural Loans in Washington

NOTE: INCOME LIMITS HAVE BEEN UPDATED SINCE THIS POST WAS PUBLISHED.

USDA is a government backed program that allows zero down payment on homes that are in a designated rural community for families earning less than a certain income. A majority of Washington State single family residences (homes and condos) qualify…of course if you live in metropolitan areas like Seattle or Bellevue, odds are your home will not.   To qualify, families must be without “adequate housing” (may not own a home or adequate home), must have reasonable credit history and be able to afford the mortgage (29/41 is the debt to income ratio guidelines).  

Income limits vary by county and the entire household income is considered (not just the primary borrowers or those borrowers on the mortgage) for determining if the income meets the guidelines.  This is separate from income considered for “debt-to-income” ratios.  USDA loans allow incomes up to 115% of the median income for the area.  Income limits vary on household size from 1-4 person or 5-8 person.

As of the publishing of this article, in Washington, the income limits by county are:

  • King and Snohomish Counties: 1-4 Person $92,600 | 5-8 Person $122,250
  • Island County: 1-4 Person $89,550 | 5-8 Person $118,200
  • Kitsap County:  1-4 Person $85,700 | 5-8 Person $113,100
  • Thurston County: 1-4 Person $85,100 | 5-8 Person $112,350
  • Clark County: 1-4 Person $82,800 | 5-8 Person $109,300
  • Pierce County:  1-4 Person $81,450 | 5-8 Person $107,500
  • San Juan County: 1-4 Person $78,050 | 5-8 Person $103,050
  • Whatcom County: 1-4 Person $76,850 | 5-8 Person $101,450
  • Benton and Franklin Counties: 1-4 Person $75,750 | 5-8 Person $100,000
  • All other Washington counties:  1-4 Person $74,050 | 5-8 Person $98,650

You can check current USDA income limits by visiting the USDA site (clicking here)…be sure to click the “guaranteed” option.   Income limits can and do change. You can also use USDA’s income eligibility calculator which will factor in deductions to income, select the “guaranteed” results (not “direct”).

Income used to determine if a family is under the household income limits includes all those (18 years and older) who will be living in the home regardless of whether or not they’re on the mortgage.  Incomes of children over 18 who working AND who are full time students are not factored.

USDA_001 Once you’ve determined that you meet the household income limits, the next step is to see to see what communities in your area are eligible for USDA financing. You don’t have to go too far from Seattle or Bellevue to find homes that do qualify for this type of mortgage.   Using the USDA site, under “Property Eligibility” click “Single Family Dwelling”.  From there you can either enter a specific address or click on the map to narrow down your search. 

Sellers and real estate agents who are working in neighborhoods that qualify should be sure to include this program as an option they’ll consider for financing on their offers. 

I’m pleased to offer USDA financing as an option for borrowers who meet the criteria since there is no private mortgage insurance and the program is a 30 year fixed rate. If you have any questions regarding USDA or other mortgage programs for financing homes located anywhere in Washington State, please contact me, I’m happy to help!