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USDA loan question


PrincessButtercup
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I am hoping someone can shed some light on the USDA guaranteed loan for me.

 

I called up regarding the USDA direct loan program, and after speaking with the representative for a few minutes, she said she would send me info about the USDA guaranteed loan as well since the direct loan program is out of money right now in my area. I figured it would be easy enough to take a look at the packet and figure out if my fiance and I qualify, but either I am completely missing something or it is super unclear!

 

I can not find any piece of paperwork that says what the minimum income limit is for this loan program. There is a table that shows the income limits for very low income, low income, and median income, but I do not know which income limit is associated with this loan - I think you need to make at least the very low income, but no more than the median income. Does anyone know?

 

Thanks for your help!

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It's the "moderate income" that your household income needs to be within.


The USDA income calculator link at http://eligibility.sc.egov.usda.gov/eligibility/incomeEligibilityAction.do?pageAction=state&NavKey=income@11 will help you determine if your income is eligible. There is no minimum amount of income that you need to make in order to be eligible for USDA - you just need to make enough income to be able to qualify for the mortgage payment + your other payments. No more than 29% of your gross monthly income should be spent on the housing payment, however sometimes you can go a little above that. The housing payment + your consumer debts (car, student loans, credit cards, etc.) shouldn't be anymore than 41% of your gross income, but again sometimes you can go a little above that too.

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Thanks, liverichly! The woman I spoke with must have misunderstood something I said, I guess. We make about $33k/yr combined, and she said that I was "on the cusp" for this program. I know there's no way we're close to the upper limit, so I figured there must be a minimum.

 

So $2750/month, that means we can afford about an $800 payment for all PITI. Assuming TI comes to about $300/month, we're left with $500 for the mortage payments. That gives us enough for a $110,000 loan at 3.5%.

 

Which brings me to a couple follow up questions:

  1. I know the interest rate is set by the lender, not USDA. Is 3.5% a realistic guess for that?
  2. We have no other debts. We've have been saving for years and have put away 60k. I have decent credit, though I'm not sure on the exact number. It was 665 last summer, and could have only gone up. He has only had a credit card for 8 months or so, but has not missed payments. Does it seem likely that we would be able to get approved for bigger loan that would put us over 29% based on that?
  3. Assuming #2 is a yes, would it make more sense to use our savings to ask for the bigger loan, or would we put down a down payment?
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Yeah 3.5% is realistic for USDA interest rates.


With USDA another eligibility requirement is that you cannot be able to qualify for a conventional loan, and that typically is determined if you have acceptable credit and at least a 20% down payment... so if you have $60k saved up (good job by the way) then that could disqualify you from being eligible for a USDA loan.

 

The USDA eligibility requirement reads: Be without sufficient resources to provide the necessary housing and be unable to secure the necessary conventional credit without an RHCDS guarantee upon terms and conditions which the applicant could reasonably be expected to fulfill.

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We tried applying for a loan through Rhode Island First Time Homebuyers at the end of last summer, and we were declined because of my fiance's credit (or lack thereof). I assumed that less than a year of credit would not be enough for us to qualify for a traditional loan - but I suppose we could apply for a loan with our banks as well.

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Yeah less than a year of credit is tough to get approved for conventional, particularly with less than 20% down (as every PMI provider I know wants at least 12 months of credit - non-traditional credit can be used in lieu of traditional credit though). However you mentioned you tried applying end of last summer, or about 6 months ago... so does he have the year of credit history now?

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