What are the requirements for the USDA program in Killeen? 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 Killeen.
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 Killeen 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 Killeen.
It has to be a Single Family home in the Killeen 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 Killeen – Do You Pre-Qualify?
[MUSIC PLAYING] Hello, and welcome toCalHFA's lender training.
My name is Molly Ellis.
Our focus in this video is ourconventional first mortgage programs, basic guidelines,and the common ways to layer closing costs and downpayment assistance programs to benefit your borrowers.
First, let's talk about ourCalHFA Conventional Program.
This is a conventional firstmortgage with a very affordable interest rate.
It has a maximumloan to value of 97%, and a maximumcombined loan to value of 105% with a minimumcredit score of 640.
It follows FannieHomeReady guidelines.
Technically, CalHFA doesn'thave a loan amount limit.
However, we do chargea high balance fee for any loan over $484,350.
This would only be applicableif the Fannie HomeReady loan limit in the countythe property is located allows you to exceed $484,350.
Otherwise, you'd have to adhereto the HomeReady loan limit.
On a high balance loan,the max LTV is 95%.
For the highbalance fees, please check out the rate pageon CalHFA's website.
Next is our CalPLUSconventional program.
This first mortgage alsofollows Fannie Mae's HomeReady guidelines, but itcomes with built-in loan for closing costs called theZero Interest Program or ZIP.
CalHFA offers ZIPat a loan amount of 2% of the firstmortgage loan amount or 3% of the firstmortgage loan amount.
Please check out therate page for pricing.
ZIP has a zero interestrate with deferred payments.
It's only available forfirst-time homebuyers, and remember, the definitionof a first-time homebuyer is someone who is not owned andoccupied a principal residence in the past three years.
One of the bestbenefits of using either conventional program isthe reduced mortgage insurance rates through GenworthMortgage Insurance.
The borrower can choosea monthly premium, a single premium, or theycan choose from several split premium options.
This allows you tocustomize the loan to meet the needsof your borrower.
You can access Genworth'sMortgage Insurance rates through our RateExpress, or we've also included a link in theloan program handbooks on the website.
Click on Lenders/RealEstate Agents, then click the LoanProgram Handbooks tab, then choose the program handbookapplicable to your loan.
For all CalHFAconventional programs used by first-time homebuyers,homebuyer education is required for at leastone borrower on the loan.
CalHFA does not allowmanual underwriting or non-traditional crediton our conventional loans.
What makes our program so greatis our down payment assistance and closing cost assistancelayer these programs with our first mortgagesto increase affordability for your home buyers.
For example, if yourborrower is employed in a K through 12 publicschool in California, they would be eligiblefor CalHFA's Schoolteacher and Employee Assistance Program.
This mortgageassistance will lend 4% in down payment or closingcosts at a very affordable 3 and 1/4% simple interest rate.
Or if your client doesn't workin California's public schools, they can use our MyHomeAssistance Program.
MyHome is 3 and 1/2% of thesales price or the appraised value, whichever is less,which could get your borrower almost 6% or 7% in mortgageassistance when you layer it with CalPLUS and ZIP.
The interest rateis only 3 and 1/4% simple interest withdeferred payments.
And whether you'reusing the School Program or theMyHome program, it does need to be insecond lien position, and your borrower needs tobe a first-time homebuyer.
Make sure you take a minuteto check out the rate page on the CalHFA website.
We offer a lower interestrate if the borrower decides not to use the down paymentor closing cost assistance, and a lower rate if theyare purchasing home either in a Fanny HomeReady areadesignated as no-income, or when the borrower's incomeis below the Fannie HomeReady limit.
Please remember, theFannie HomeReady limit is only an indicatorfor a lower rate.
If the borrower is overthe Fannie HomeReady limit, they are stilleligible for CalHFA, it's just at a higher rate.
You can use the FannieHomeReady Lookup Tool to find the informationon specific property address and get the FIPS number-- you'll need to enter it intoCalHFA Mortgage Access System.
That covers our conventionalfirst mortgage programs and the down payment assistanceand closing cost assistance that can be layered with them.
Now let's move onto the property requirements and maximumlender origination fees.
The property requirementsfor these programs for the most part follow FannieMae's HomeReady guidelines.
Also, make sure you adhereto any lender or investor overlays.
The sales price ofthe property must be within CalHFA'scurrent sales price limit.
A one-year homewarranty is required for first-timehomebuyers unless they're purchasing new construction.
The property cannotexceed five acres.
Manufactured homes are allowed.
If it meets Fannie Mae MHAdvantage, the max LTV is 97%.
But if it's MH standard,the max LTV is 95%.
Either way, minimumcredit score is 660.
If the property meetsFannie Mae guidelines for an accessory dwellingunit, then as allowed, you can count the rental income.
Now, let's talkabout lender fees.
First, to originateCalHFA loans, you must be aCalHFA-approved lender.
The maximum a lender cancharge in lender fees on the first mortgage is 3%.
This includes origination,processing, and underwriting.
It does not includeany third party fees.
Our rates are at par, so youhave to charge origination on these loans.
But with the closing costsand payment assistance from ZIP andMyHome, the borrower will still have very littleout-of-pocket expenses.
CalHFA will allow you to chargean additional subordinate processing fee of $250 forMyHome or the School Program, and an additional $50processing fee for ZIP.
Also, you may not chargeany additional fees like origination,per diem interest on the subordinate loans.
We want to help make this easy,so we have provided some tools to help you process loanswith CalHFA programs.
The loan program handbookfor each one of our programs includes all the detailsabout the program in one easy handbook.
The loan program matrixprovides a quick reference of terms and requirementsfor all CalHFA programs.
The very popular loanscenario calculator will help you calculateloan amounts and print results for your borrowers.
You can find these toolsunder Lenders/Real Estate Agents on our website.
Click on Loan Program Handbooksfor the program handbooks, the Calculator icon for theloan scenario calculator, and the Tools, Affidavits, andDocs tab for the loan program matrix.
Now let's look at the funstuff before we close.
Our single familylender training team offers in-person trainingclasses every month across the state.
Attend a four-hourworkshop to learn all about CalHFA's programs.
Classes are announcedeach month on our website and through our monthlye-news announcements.
To sign up for our class,visit CalHFA's website, choose the Training Calendarlink under Lenders/Real Estate Agents, and sign up for a classthat will work best for you.
We also provide customizedmarketing materials that can be downloadedfrom our website by clicking on theLenders/Real Estate Agent section of the website,choose the Loan Officers tab, then choose the Sales Toolsand Marketing Materials link.
For any questions you may have,contact Single Family Lending at 916-326-8033.
Or you can email ourLender Services Division at lendertraining@calhfa.
Thank you so much for your time.
Now get out there andhelp more Californians have a place to call home.
Working With the Right Lender | Total Mortgage Minute
- 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.