RURAL DEVELOPMENT (MICHIGAN)

GUARANTEED RURAL HOUSING LOAN PROGRAM

"QUICK FACTS"

PROGRAM MISSION, BENEFITS AND PARAMETERS



•The purpose of USDA RURAL development for Michigan is to provide modest housing for moderate income families in non urban areas

• Up-front Guarantee Fee of 2% for purchases and 1% for refinances

• 0.3% annual fee based on the average scheduled unpaid principal balance of the loan, you can find a calculator at: http://usdalinc.sc.egov/usda.gov/USDALincTrainingResourceLib.do

• Up to 102% (with Guarantee Fee) financing based on appraised value versus purchase price

• 30 year, fixed rate term

• Seller contributions and third party gifts allowable

• No statutory maximum lending limits

• Not restricted to first time home owners

• Loan funds on purchases can be used for repairs, the Guarantee Fee and most lender fees

• Loan funds on refinances can be used for P&I, the Guarantee Fee and most lender fees Your Ad Here

PROPERTY REQUIREMENTS

• Property must be in non urban areas, maps available at www.rurdev.usda.gov/mi

• Property eligibility determination with an address: http://eligibility.sc.egov.usda.gov

• Primary residence use only, no rentals or income producing properties

• New or existing stick built, modulars and condos/PUD

• Manufactured units must be new with the dealer approved by RD

• Property must meet existing home requirements of HUD Handbooks 4150.2 and 4905.1

• Water inspection for private systems

• Conventional appraisal with lender's choice of appraiser

• An In ground swimming pool acceptability will be reviewed on a case by case bases

• No set lot size limitation

• The site value should not exceed 30% of total appraised value (exceptions possible)

CREDIT HISTORY CRITERIA

• RMCR or Td-Bureau merged report

• Cannot be delinquent on a federal government debt

• Applicant's with 640 middle credit score and above, lenders do not need to provide a credit waiver on adverse credit unless:

• A foreclosure within the past 3 years

• Pre-foreclosure activity in the previous 36 months

• Chapter 7 Bankruptcy - Discharged within the past 3 years

• Chapter 13 Bankruptcy - A completed debt restructuring plan within the previous 12 months prior to application

• Late mortgage payments in the most recent 12 months

• Collection accounts remaining open alter closing

• Less than 640 middle credit score items of concerns Include the above and the items listed below:

• More than one thirty day late in the past 12 months

• Debt written off in the past 36 months

• Judgments not paid for at least 12 months

• Collections opened in the past twelve months or older ones that are still open

• 580 middle credit score and below with adverse credit Is not acceptable

• Acceptable mitigating circumstances may offset certain adverse credit issues

• Consumer Credit Counseling - The lender must document that 12 months of repayment period has elapsed under the plan with all payments made on time and the applicant has received written permission from the counseling Agency to enter Into a mortgage transaction.

GRH LOAN GUARANTEE COVERAGE

• The first 35% of the loan is covered 100% by Rural Development,

• The remaining 65% is shared, 85% by Rural Development and 15% by the lender Maximum loss payment to lender is 90% of the original loan-amountI •

• VOE and current pay stub or acceptable alternative documentation

• Self employed, two years of tax returns and current P8aL and balance statement

• Non taxable income may be grossed up by the applicable federal tax rate

• MCC's can be used to improve repayment ability

INCOME AND RATIOS

Maximum income Limits can be found at www.rurdev.usda.gov/mi Ratios used are 29/41, ratio waivers available with proper compensating factors

TDR includes debts with more than 6 months remaining Income is projected forward including projected pay raises VOE and current pay stub or acceptable alternative documentation Self-employed, two years of tax returns and current P&L and balance statement

Non Taxable income may be grossed up by the applicable federal tax rate MCC’s can be used to improve repayment ability


If this Program does not fit, how about an Fha or Fha203K Program instead of Rural?






Jon Porrey



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