What are the requirements for the USDA program in Victoria? So that’s going to be looking at a 640 minimum credit score requirement.
There is a income requirement too when applying for a USDA Loan Victoria.
So basically the income requirement is about 78,000 if you’re in a family of 1 to 4 if you’re in a family of 5+ that’s gonna go up to about $103,000 on the income limit.
The big requirement for USDA is that it’s property specific.
It’s got to be in a USDA Approved Zone. How much down payment does this program require?
It’s actually 0% down payment which is Great!
Ok Awesome, and how much does the average home buyer come in with out-of-pocket?
So because your down payment for a USDA Loan in Victoria is covered you’re just gonna have to come in with again your prepaid and closing cost So if it was a $300,000 purchase.
you’d be looking at about $7,500 cash for keys to get in the home.
What type of home buyer is the USDA Loan program Ideal for? So this is going to be ideal for the home buyer that’s looking for a property in those specific areas.
Ideally it’s properties that are going to be USDA Eligible rural zones.
So not right in the middle of the city, but maybe if it’s more on the outskirts, on a little bit of land, lower tax rate areas that’s probably going to be a property that’s eligible and that would be ideal because that one would probably qualify OK, Fantastic.
What is a USDA Home Loan?
I bet you’re wondering, what is a USDA home loan?
Designed with the residents of more rural areas in mind, the United States Department of Agriculture designed its loan program to enrich rural communities by providing affordable home loan options to low-income households that may not be able to secure home financing through other means.
Who has time to stop and smell the roses? You don’t, and this isn’t even a rose.
What are the requirements for the USDA program?
So USDA has a few interesting requirements First of all, you’ll need to have at least a 580 credit score Some lenders require a 620 credit score.
Your household income has to be under the county maximum Like a lot of down payment assistance programs. This is based on family size So 1 to 4 is one category and then 5 and above is a higher threshold for qualifying
What’s unique about this one is the home has to be within a designated area.
So, Typically what that means is.
NOT within a metropolitan area So within our area here (Riverside county) Our local cities around her don’t qualify But we only need to go 10 miles away to where there’s an open area where there’s Several homes that qualify.
USDA stands for United States Dept of Agriculture But it’s NOT a farm loan.
Specifically, they don’t finance this program for farms in Victoria.
It has to be a Single Family home in the Victoria area, without a barn structure on the property.
Then it also has some home price limitations.
The Threshold is a little bit lower than say an FHA loan for the loan limits.
Ok, and how does this program differ from other Down payment programs?
So it’s different because it’s not really a down payment program but it allows financing up to a 100% of the purchase price And it’s interesting because you can actually use this program with 1 or 2 of the other programs.
If you need closing cost assistance But, what’s unique it’s a 100% Financing so you don’t need a 2nd or a 3rd lien on the property.
Your interest rates are typically lower than if you combine it with a down payment assistance programs and you don’t have to repay any down payment assistance.
It has a monthly factor It’s like mortgage insurance upfront It’s financed at a monthly component.
Much less than FHA So if you can qualify for this program It’s better than FHA And As I mentioned, rates and payments Are typically lower on this program So USDA is really a great program.
And on average How much does the home buyer have to come in with out-of-pocket?
So Again, we are financing the whole loan Purchase price up to 100% So the only thing remaining is then the closing costs Typically, plan on around 3% of the purchase price for funds to close.
The question there then becomes, Well, Where does that come from? Typically, we ask the seller to cover those costs And if we can get the seller to cover 3% Then, the buyer may only need to come in with an earnest money deposit.
And they may even get most or all of that back.
If the seller is covering all the fees.
One unique feature about USDA Versus all other loans is that if the home appraises for more than the purchase price.
We can finance the closing costs up to that appraised amount So, no other loan I know that we can actually finance the closing costs.
What type of home buyer is this program ideal for?
So certainly those that don’t have access to money for a down payment Anyone that wants to live that doesn’t have to live within a metropolitan area because, again, the house has to be in an area that is not in a high densely populated area.
It’s also suited well for people who have some credit issues and anybody that qualifies for this program would definitely be better served than going FHA so those type of people.
And besides the Area restrictions are their any other property restrictions? So property restrictions are going to be similar to FHA They’ll do manufactured homes.
They’ll do homes with Casitas So no real other restrictions.
Just if it conforms to the FHA guides then it should qualify for USDA There’s a couple little quirky things that you don’t run into very often like you can’t actually have a barn on the property It definitely can’t be for agricultural purposes It has to be for residential purposes.
USDA Loan Victoria – Do You Pre-Qualify?
- FHA versus Conventional.
What is the difference? Hi, I'm Ledeana with Homes By Strand and RE/MAX Town & Countryin Port Orchard, Washington.
And we're gonna get started right now.
(upbeat music) I'm going to discuss the short version because the difference of these two loans can actually get quite complicated.
But my teaching style, let's keep it on the surface and let's get it to where you guys can immediatelyknow the difference between the two and then you're going to know which one that you really need to research more withyour lender, of course.
So conventional is aprivate sector loan that is not backed by The Federal Government.
It has what's calledprivate mortgage insurance which is called PMI, private mortgage insurance.
FHA on the other hand, that is a private sector loan as well but it's backed by The Federal Government.
And it has what's called MIP, mortgage insurancepayment that is required.
Alright? Now that MIP, that is insurance for the lender.
That is not yourinsurance as the borrower.
That is insurance on the loan, okay? And that is where The Federal Government says, "Hey, we're guaranteeing that you're "gonna get a portion ofthis loan back from us.
" They get a percentagethat they loaned, alright? And then those MIP payments that stayed for the life of the loan, that's also your insurance per se.
Now how all this gets broken down and where that moneygoes and how it's spent, that's not something that we need to be focusing on.
What we want to be focusingon is what is the difference between MIP and PMI is thattheir both mortgage insurance.
But one, is you're paying the government and the other one is that you're paying a third-party, okay? Now the major difference, like I just said is that MIP is for the life of your loan.
So as long as you own your property and as long as you aremaking your payment, then you are making the MIP part of your house payment.
With conventional, when you have the PMI, you can drop that insurance off once you have hit 20%, alright? So when you have paid down at least 20% of what you originally borrowed, you no longer have to pay PMI.
And that's where the biggest myth and confusion comes from, is because a lot of people think that when they get a conventional loan that they have to put 20% down at the gate.
And that's just not true.
There are some conventionalprograms out there where you can put as little as 3% down.
Now, the fees between FHA loan and a conventional loanare completely different.
You're always gonna haveyour lender origination fee which that lender origination fee, that's how you paid your lender to do their job for you and to fund this loan and to broker the paperwork, alright? But then there's also, there's some other feesthat what are called program lending fees.
And those are going to be different between the two.
That's why it's really important that if you know the surface difference between the two, then you're really gonna know which one is gonna be the best loan option for you, not only today but long-term, alright? Because the biggest mistake that I see clients make is that they want to get intoa property right now.
And so they're looking attheir finances right now, which that is important, correct? But sometimes, instead of waiting a month or two and having a little bitmore money to put down, they don't realize howmuch money they would be saving long-term bychanging the program.
So that could be doesyour credit score need to come up a little bit more? Do you need a little bit more money to put down to where you can get into a different program? Or do you need a little bit more money so you can actually buythe interest rate down? I mean, those are allthings that a good lender should be explaining to you.
And these are questions and things that you need to be aware of so you know what to ask, alright? But here's a couple ofother differences that, in my opinion, are pretty vital to understand.
There's a common myth.
A lot of people think that because FHA is a government-backedloan that it's harder to qualify for an FHA when it's actually quite the opposite.
And the reason why a lot ofpeople are confused with this is because with an FHA loan, you actually have to havetwo sets of qualifications you actually have to meet.
You have to obviously meet the lender, the banks, the personal private guidelines, and then you also have to meetthe government guidelines.
Because again, if the government isgoing to back the loan, you can bet your bottom dollar you're going to have tomeet certain requirements in order for them toguarantee a percentage to the lender.
But the great thing is, is that most everybody meets the government's qualifications and I stress on most, alright? But here's the thing.
When the lenders knowthat they're guaranteed to get a percentage of theoriginating amount back, when you know you're getting a portion of that back, they're a little bit morerelaxed on that whereas, when you get a conventional loan, nobody's guaranteeing that lender that they're going to get any money back should you as the borrower default.
So the conventional loans, those are actually theones where the standards are a little bit higher and they're not really hard to meet, it just takes a little more legwork as the borrower.
So you have to have a little bit more proof per se.
You have to be able tosubmit some more paperwork because again, you have one lender that's not guaranteed to get anything and then you have anotherlender that's guaranteed to at least get something.
So, does that make sense? Now, we can get into the nitty-gritty of what those requirements are but I think for the purpose of this video, I think it's really important that we just stick with the basics because your lender should be able to explain to you your ownpersonal circumstances.
So that's why it's really important that people understandthat conventional loans are not scary.
If you have the paperwork, if you can show your proofin the pudding per se, then sometimes a conventional loan is actually the best way to go because interest rates are typically a little bit lower.
And why is that? Well, because when you'repaying a higher percentage rate on the FHA side, that's also because aportion of that is going towards the government-backed portion.
Does that make sense? So, it's super simple.
You just need to finda really great lender who is really able to explain what their programs are and how they differ.
And that, folks, is your tips for today.
And if you need a good lender, I have a slew of them.
And why do I have more than one? Because every lender thathas different programs that will meet different criteria.
That's why a good agent has more than one.
And you can bet your bottom dollar, I've got just the one should you need one.
That's it for today.
We'll see you next time.
Don't forget to hit thesubscribe button below and also the little bellnotification down below as well, so you're kept in the loop and up-to-date on this home buying thing.
And you don't wanna miss any important information that I'll be sharing with you in the coming weeks.
And thank you so muchfor watching my video.
I hope to see you soon.
And bye for now.
[Mortgages] How to Qualify (HOME LOANS) Home Loan Requirements | 2019
Hey Mark Albert here, so glad you're withme today.
Today for the very first time on my youtube channel I get to discussfake news.
I love it.
So pay attention it's gonna be prettyexciting.
Private lenders stress test.
This is new and it's unsubstantiated.
At least five or six syllables.
Let me tell you if you know how manysyllables in that word please write down below so I tried to figure out that fiveor six words syllables.
Fake is one syllable.
News is one syllable.
This isfive or six.
Its unsubstantiated and we're gonna look at that together.
First of all lenders in Canada there's three categories.
There's A lenders, Blenders, C lenders.
A lenders where you get your best rate you need your best creditscore.
Need at least six hundred fifty credit score.
You can do that at fivepercent down with an A lender, any of the big banks and many other lenders thataren't part of the big bank series.
B lenders, if you can't qualify with an A lenderyou got to go to B lender.
Credit score you can get away with under six hundredwith some of them.
But you gotta put 20% down.
A little easier to get in to qualify based on stress test but you gotto put a bit more down.
C lenders, that is where you're talking privatemortgages.
So from a credit standpoint it's less importantand why is that? the reason is is because you're looking at an equity loan.
So theloan is based off of the equity on in on the house and so private lenders willlend out based on the amount of equity you have.
And this is pretty helpful forsome people who can't get they need more money and there with an A lenderor B and they need more money for pretty strategic reasons and these guys havehelped people have been stuck in a bit of a pickle.
They've been very veryhelpful for a lot of people.
So you didn't know this probably but privatelending in Canada it's about 10% of the total value of mortgages out there.
So right now all mortgage business is estimated about 1.
5trillion dollars in the mortgage market in Canada and 10% of that isprivate money.
Okay? So on January 25th which is this pastFriday a number of media outlets picked up a story published by Reuters and openlike this, it said "Canada is considering subjecting private lenders to the samemortgage stress test rules faced by banks to prevent housing marketsfrom being destabilized by the lenders rapid growth, three sources with directknowledge of the matter said this" and that's unsubstantiated.
How do I knowthat? Well let me tell you.
There's two things that I'm gonna tell you.
MortgageProfessionals Canada is an organization, they're a really key strategic partner inthe mortgage industry in Canada and I happen to be a member of them.
So theysent me a notice on this.
This is what they did.
They contacted directly theMinistry of Finance from the Government of Canada.
They called out directly andthey spoke to senior ministry officials and they were advised by them that thesereports are unsubstantiated.
Word-of-the-day unsubstantiated can'tsay that too many times in a row I tell ya.
Not currently considering anyregulation on private lending so we're clean right? And that's the firstaffirmation.
Secondly, we got Bill Morneau Finance Minister, he wasspeaking to reporters in Ottawa.
This is what he said, he said this "I'm notcurrently considering any stress test on private mortgage lenders".
There you go.
No stress test.
Nothing being considered.
So what does that mean for us? Well foryou, just know, you want to get if you got to get a mortgage for your house youwant to get an A lender if you can.
Right? If you can't you got to defaultto a B and as time moves on circumstances may be that you may needmore resource and because of the stress test you may not be able to qualify formore money.
But you're already an A mortgage or a B mortgage and you haveequity in your home and if the need is important you should be able to look atconsidering private lending if it meets the need.
If you need to get advice onthat, I'd be happy to, reach out to me my contact information is below.
Listen I hope this was helpful.
Thank you so much for being with me today.
Have yourself a fantastic day.
Looking for to talking you soon.