About Government Refinance and Home Purchase Programs

The USDA rural development program is a popular home purchase program. The primary appeal of the program is that it requires no down payment. In addition, borrowers who get a USDA RD loan avoid the expensive monthly mortgage insurance associated with FHA loans. One of the primary limitations to the program is that only homes that are in designated rural areas are eligible.

On October 1, 2014, the eligibility maps for the USDA rural housing program will change. See the USDA eligibility maps at the USDA RD site. Click on the “Single Family Housing” link in the sidebar and follow the instructions to get to the maps. Densely populated areas are not eligible but a surprisingly high number of suburbs are eligible for USDA RD program.

Contact us at our home purchase page to get more information on the USDA RD program.

Over the last couple of years rent prices have been rising rapidly across the United States. Low vacancy rates have allowed landlords to hike rates at 2-3% per year. At the same time, mortgage interest rates have dropped over the last few months. In addition, home values have been steadily increasing again after the bottom fell out of the housing market in 2007-2008.

All of these factors add up to make purchasing and owning a home increasingly attractive to many Americans. In many areas of the country, mortgage payments are the same or lower than rent costs. And with home values steadily increasing, owning a home can mean owning an appreciating asset that can often be sold at a profit down the road rather than simply pouring money into rent.

If you have considered buying a home, contact us at our home purchase page today. Our counselors can point you in the right direction regarding available government-backed home purchase programs.

Of the four main government-backed home purchase programs, the Fannie Mae program requires the biggest down payment, with a down payment requirement of at least 5%. In addition, the Fannie Mae program has stricter debt-to-income ratio requirements as well as higher credit score requirements than some of the other programs. Despite all of this, the Fannie Mae program remains a popular choice for those who can qualify for it for a couple of reasons:

1. No up front fees: The VA charges a 2-3% up front fee, the USDA rural housing program charges 2% up front, and the FHA charges a 1.75% up from mortgage insurance premium. With the Fannie Mae program there is no up front fee and that saves buyers thousands of dollars in many cases.

2. Temporary mortgage insurance: With the FHA and USDA the mortgage insurance (or equivalent thereof in the case of USDA loans) is set for the life of the loan. With the Fannie Mae (conventional) program the mortgage insurance (sometimes call PMI) can be dropped when you have 22% equity in the home. And when a 20% down payment is used there is no mortgage insurance requirement at all.

Not everyone has the income, credit scores, or down payment needed to qualify for a Fannie Mae home purchase loan. For the folks who don’t, the VA, FHA, or USDA programs are excellent choices. But for folks who can qualify for a Fannie Mae loan, it can be the best choice.

Contact us in on our home purchase page to learn more about the Fannie Mae home purchase program as well as the other home purchase options.

On the surface, you might think the FHA home purchase program has some things going against it. FHA loans require a 1.75% up front fee rolled in to the loan and FHA loans include monthly mortgage insurance for the life of the loan as well. But there several tremendous advantages of the FHA program that keep it very popular.

1. Lenient credit requirements: While a minimum credit score of 620 is needed in most cases, the FHA is significantly more lenient on past credit blemishes than any of the other programs out there. The wait period after a chapter 13 bankruptcy in just 12 months and for chapter 7 bankruptcy it is just two years. The wait period after a foreclosure or short sale is just 3 years. And with FHA loans, while some outstanding collections must be paid off the FHA tends to allow medical collections to remain unsettled.

2. Less strict debt to income requirements: While the USDA and Fannie/Freddie purchase programs have very strict debt to income requirements, the FHA (and VA) programs tend to allow the ratios to stretch higher.

3. Lower and easier down payment requirements: The FHA only requires a 3.5% down payment. The minimum down payment for the Fannie/Freddie programs is 5%. Further, the FHA allows the 3.5% down payment to be given as a gift from family members. Other programs tend to be more strict about the down payment money coming from the borrower.

4. The FHA program is available to all: The VA program is only available to eligible military veterans and USDA rural housing program only applies to eligible areas considered sufficiently rural. While there are FHA restrictions on some condo complexes, the FHA program works on all single family homes in the US.

To learn more about the available government home purchase programs, including the FHA program, contact us on our home purchase page today.

There are two primary ways to buy a home with zero money down in 2014. The first is to be a military veteran and utilize the VA loan program. The second is to utilize the USDA Rural Housing Program.

The USDA loan program is designed to encourage people to spread out and buy a home out of the more densely populated urban areas. With the name “rural” in the title you might assume that this program only applies to homes way out in the country but that is not true. In many cases, suburbs just on the outskirts out of a city are eligible for the rural housing program. Click here to go to the USDA site and see a map of eligible areas.

Advantages of the USDA Rural Housing Home Purchase Program

• Requires no money down
• The monthly mortgage insurance is much smaller than FHA mortgage insurance

Requirements of the USDA Rural Housing Program

• Home must be in an eligible area
• Combined gross annual income of all household members normally must not exceed about $90,000
• Normally requires relatively good credit with few or no collections or similar blemishes on the credit history
• The USDA requires 2% funding fee up front that is rolled into the loan

Conclusion

In cases where the USDA rural housing program is an option, it is usually a more desirable programs than the FHA or Fannie/Freddie programs. It allows for a 30 year fixed loan with no money down and minimal mortgage insurance. Contact us in the form on our home purchase page for more guidance on getting qualified for a USDA rural housing home purchase loan.

Spring officially begins in March and the spring season is traditionally a time when more families begin listing their homes for sale. The better weather along with the approaching end of the school year makes springtime a popular time for families to list a home for sale. That means spring is the best time of the year to find homes for sale all across America.

If you have considered purchasing a home, contact us in the form on our home purchase page right away. We can help point you in the right direction regarding the available government home purchase programs. With any luck you could get pre-qualified for a mortgage and start your house hunting process right away.

While there are some government programs the allow for zero money down on home purchases, those programs don’t work for everyone. As a result, most home buyers need at least a 3.5% down payment to purchase a home. This time of year it is common for families to use a tax refund as part of their their down payment funds. The timing of tax refund checks aligns nicely with the start of spring, when there is traditionally an increase of homes being put up for sale.

See our home purchase page for more information on the various government-backed home purchase programs. If you have been worried about not having enough of a down payment to qualify for a home purchase, this is a good time of year to get qualified as tax refunds come in. Contact us on that home purchase page to learn more.