What are the requirements for the USDA program in Pflugerville? 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 Pflugerville.
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 Pflugerville 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 Pflugerville.
It has to be a Single Family home in the Pflugerville 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 Pflugerville – Do You Pre-Qualify?
Hey this is Chris the Mortgage Pro.
In this video we're comparing conventional loans to FHA loans to VA loans whichone's the best one? Which one's right for you? You know so many consumers are curious.
Which loan is best for me? Today I want to help you figure out which one isgonna benefit you and your family the most, for you a short-term and/orlong-term goals because it's different for everybody.
Now there are advantagesto each one of these loans so some have lower interest rates, some have lowerfees there's all kinds of different things to think about! Now most peoplehave a tendency to just look at one thing.
The payment! Which is cheaper? Well, it's understandable when you're buying a house you say, hey which which payment is cheaper? But, again how long you gonna be in that house? Is there PMI? Will the PMIdisappear? When will it disappear? If the PMI is gonna disappear in five years butI'm gonna be here in 20 years, maybe this other loan is better a long term! So wehave to look at these things as a whole.
Now people ask you all the time what'stoday's interest rate? It's impossible to answer that question, because yourfinances and every person's finances are as different as fingerprints! When welook at the whole situation you have to understand that all these items,represent different risks to the lender and the higher the risk the higher theinterest rate! The lower the risk for example if you put a lot more money down,obviously a lower risk right? Or if you have a higher FICO score lower risk,right? Well we have to look at these things as a whole to help you determinewhat interest rate you're gonna get and that also helps determine which programis right for you! Okay now it's time we're gonna get into the nitty-grittywe're gonna get into the comparison.
Number one - conventional loan.
Aconventional loan has a minimum of a 620 Fico Score Credit score if you're notsure what a FICO score is that is your mortgage credit score.
Now on an FHA loansome lenders go as low as a 500 my company goes down to a 550 the truth isnobody gets approved at 500 anyway and on a VA loan we're also looking at thesame thing many lenders go to 500 company goes to 550.
Okay PMI mortgageinsurance and on FHA it's called MIP mortgage insurance premium now on aconventional loan what happens is it is very very dependent on what is yourcredit score somebody with a very high credit score might have a very lowmortgage insurance payment, but if you have a 620 Fico score your mortgageinsurance payment could be way high.
Now on FHA FHA has pretty much standardized, here is your MIP rate remember they're the same thing they just call themsomething else here's your MIP rate it doesn't matterif you have a 620 a 580 a 550 or 800 FICO score makes nodifference you're gonna pay the same rate.
On a VA loan great newsno PMI no MIP you got that one.
Okay we're almost halfway through the videoso hit the subscribe button and hit the like button I appreciate thatnow if you'd like to comment, I will answer every single question personallyand of course you're welcome to share this with anybody you think it'svaluable for! Okay Debt ratio! A debt ratio is thepercentage of your gross.
Gross income is before they take taxes out.
A percentageof your gross income to your debt.
Now on a conventional loan with a high FICOscore they're gonna allow you or a 50% that includes your car payment yourcredit cards student loans alimony child support all those kind of things plusthe new house payment, that should be no more than 50% now if you have a lowerFICO score, it's probably gonna be 45% that's how conventional works.
Now let'stake a look at FHA with a 580 FICO score or above, here's what's basically goingto happen.
You're gonna probably be approved to a 56.
99%let's call it 57%, again that includes all your debts plus thehouse payment as a payment.
Lastly we have a VA loan.
Now a VA loan works veryvery different it looks at how much moneyis left over after paying all this stuff.
And it's called residual income andeverybody depending on what area of the country you live inand how many people in your family there's a certain formula for it.
Now if you have 20% more than that just to give you an example if it was athousand dollars but you have 20% more $1200 and a high FICO score you may even go up to 60 or 65% debt ratio which is unbelievable and its highest in thewhole industry.
Interest rate on a conventional loan you're often going tohear Fannie Mae, Freddie Mac those are conventional loans.
On a conventionalloan you are gonna have a higher interest rate than either FHA or VA.
Onan FHA loan it's lower than conventional and right about the same as VA they havevirtually the same interest rates.
Down payment on a conventional loan you'reusually looking at a 3% down payment.
People ask me about a conventional loanFannie Mae Freddie Mac yes those are conventional loans.
Now if we look at anFHA loan an FHA loan is gonna require a three and a half percent down payment aslong as your FICO score is 580 or above.
If it's 579 or below it requires a 10%down payment and of course for our veterans who honorably served, we thankyou! You get a zero percent down payment loan.
Okay so we talked about PMI, MIPmortgage insurance whatever you want to call it.
But there's also somethingcalled upfront mortgage insurance.
Now on a conventional loan there is no upfrontmortgage insurance, but those of you with a high FICO score might want to pay some, and they eliminate the monthly PMI payments forever,.
So that's a big dealand that's only available on a conventional loan and it doesn't makesense unless you have a really good FICO score.
On an FHA loan we take the loanamount and multiply it by 1.
75 percent we have to add that to the loan amount.
Simple example - if you have a hundred thousand dollar loan 1.
75 percent is $1,750, we're gonna add that, so you'd actually be borrowing $101,750 upfront mortgage insurance.
On a VA loan there's a couple of differentscenarios here the first time use of a VA loan it's 2.
15%so on that same hundred thousand dollars it's two thousand one hundred and fiftydollars added on on a second time use it's three point three percent so that'sthree thousand three hundred dollars now it doesn't sound like the end of theworld but if you're taking a four hundred thousand dollar loan and it'sa second VA loan that's three point three percent that is $13,200, that maymake you say mmm this other loan might be better.
Now though lastly if you're aveteran who happens to be disabled 10 percent or more there is no upfrontmortgage fee that there is no VA funding fee it doesn't exist for you.
Okayseasoning from bankruptcy many Americans through the last fewyears they've had a hard time and they did file a bankruptcy on a conventionalloan 4 years must have elapsed from the discharge not from when you startedbut from when it was finished before you're allowed to apply for aconventional loan.
On an FHA loan it's only two years and on a VA loan it'sonly two years.
Short sale seasoning.
Well a lot of people ask what's a short sale? Well at a time when people owed more than the house was worth, they often wentto the bank and said, hey my house is worth three hundred I owe four hundredand the bank accepted three hundred thousand dollars.
That was called a shortsale.
Well if you have a conventional loan if you want to apply for aconventional loan it would be four years after a short sale.
For an FHA loan it'sthree years must have elapsed from the time of the short sale and for a VA loanit's only two years.
Again Vets win, they earned.
A foreclosure well yessome people went into really hard times on a conventional loan we are looking atseven years before you can buy a home againOn an FHA loan it's only three years and For the vets - two years from aforeclosure okay Time back to work after an extendedabsence.
Well on a conventional loan there is actually no real time frame butthe lender will take a look they just want to make sure it's reasonable andeverything is considered as a make sense situation you can be back to work forone month after or six months or a year off.
On an FHA loan FHA guidelinesrequire six months back to work with pay stubs proof they've been back to workfor six months before they'll accept that income.
On a VA loan it varies perlender some lenders will accept right back to work some might want six months or three months a lot of them will require just get past the probationaryperiod on the job and you're good to go.
Occupancy on a conventional loan you can buy for a rental, you can buy for a second home if maybe you want to live inthe mountains or down by the beach on the weekends or obviously for anowner-occupied property.
For a FHA and VA loan it is owner occupied.
Hopefullythis video will help you need a decision making process which loan is right foryou but if you still stuck, reach out to me call me, text me, email me and if youwant this information for free go to www.
Info click onthe tips page we have a download button right for you and of course I want tohelp you fire your landlord.
When should you talk to a mortgage lender? | Upstate Roots Podcast
- 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.