What are the requirements for the USDA program in Atascocita? 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 Atascocita.
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 Atascocita 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 Atascocita.
It has to be a Single Family home in the Atascocita 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 Atascocita – Do You Pre-Qualify?
hey this is Chris the mortgage pro todayI'm gonna teach you how to qualify for a mortgage well there's a lot of thingsobviously that a lender has to look at so let's go through each and every oneof them the first one that stops everybody and they get all nervous iscredit now some people have outstanding credit and some people hey they havechallenges maybe they had late pays you know bad things happen to good peopleall the time and sometimes that's the reason for a low credit score sometimesit's you don't even have enough credit so let me give you a way to think abouthow the lender will look at your credit they say to themselves hey if this guycan't pay a $25 a month credit card are we gonna lend them three hundredthousand dollars it's a small way of thinking don't think fold up thinkbigger think I'm not gonna go out to dinner I'm gonna pay my bills first youpay your bills this is what my mama taught me first you pay your bills youpay the mortgage you pay all your other debts then you figure out a wheat andsteak over eaten beans it's just a way to think if you think like that in ashort period of time your credits gonna be good enough to fire your landlordokay next thing lender needs to know income well do you have job stabilityhow long you been on your job look you could get a job and get approved thenext day you really can but if you change jobs every three months well thatjob stability isn't there they want to see some kind of stability do they wantto see income of course how do they know that you can afford to make that paymentthey need to know that you have the income they expect it to continue forusually three years is what they're looking for obviously you can get fireyou can get laid off things could change but they have a reasonable expectationof three years going forward that the income will continue so they want to seethat they'd love to see a history the stronger the history the stronger thecase you could fire your landlord okay next thing they want to seedownpayment they call this skin in the game if you put up your own money thatyou worked hard for for a down payment they say hey they got some skin in thegame they're serious they're committed now if you put a zero down program andwe have these zero down programs they work great for some people but it makesa little bit tougher for the underwriter to say yeah they're worth taking a shoton so we want to see a down payment sometimes people put $200,000 on a downon a four hundred thousand dollar house do they have some skin in the gameit makes the underwriters decision way easier doesn't it and if a person can'tput a thousand or two thousand dollars down it makes the underwriter a littlenervous so take advantage of the programs save some money but be surethat you're ready to show you're committed to this transaction okaysomething else obviously the underwriter wants to seewe need an appraisal of the property we have to know the lender needs to knowthat if it's a four hundred thousand dollar loan that the house isn't worththree hundred and fifty thousand dollars so the collateral is the last piece ofthe puzzle that they have to make sure it's worth it but that also protects youas the borrower why because if you commit to buying a house for $400,000and it appraises at three hundred and eighty thousand is that something youreally want to do so this is designed to protect you and protect the lenderthat's a big deal okay not only do they want to see your credit but on thecredit report it's a list of debts what do you mean well you have your carpayment on there you have your credit cards you may have child support alimonywe have to look at all the debts if you make $5,000 a month but you have $2,000a month in debt doesn't leave a whole lot for a house payment so we have tolook at all the numbers versus your income so that's the last thing thatthey're gonna want to see how much is going out already because you're gonnaadd on this new house payment okay so those are the five things that alender needs to see they want to see your credit are youresponsible do you pay your bills on time or do you make excuses for notpaying them do you have crazy debt that's out of control that you can'thandle when you add on house payment do you have income and job stabilityhow's that going do you have five new jobs or one new jobit doesn't really matter if you have two or three jobs but if you change your jobon a regular basis not gonna work what else they want to see how much moneyyou've saved what's in your 401k what's in your IRA what is in your bank do yousave money do you have a financial responsibility that you are showing youare a responsible borrower those are the key things they want to see andobviously the appraisal they want to make sure the collateral is solid itprotects the lender and protects you so this is Chris Trapani call me I'll helpyou figure it out and together we're going to fire your landlord!.
Ryan Venz discusses USDA Loans.
- 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.