{"id":19925,"date":"2018-03-20T13:54:08","date_gmt":"2018-03-20T17:54:08","guid":{"rendered":"https:\/\/pfh.ysh.temporary.site\/website_d1c340c1\/?p=19925"},"modified":"2018-04-05T11:33:39","modified_gmt":"2018-04-05T15:33:39","slug":"usda-home-loan-map-changes-2018","status":"publish","type":"post","link":"https:\/\/pfh.ysh.temporary.site\/website_d1c340c1\/usda-loans\/usda-home-loan-map-changes-2018\/","title":{"rendered":"USDA Home Loan Map Changes 2018"},"content":{"rendered":"

USDA just announced that it will make new map change on June 4th.\u00a0 This means that if you are buying a home with a USDA Home Loan, you will need to have a commitment in hand from USDA by the deadline.<\/strong>\u00a0 The USDA Home Loan Map Changes this year are NOT the “Big One” that we know is coming in the next couple of years… I always hold my breath when I look at what the changes will be. At some point, likely in 2020, the new Census data will preclude MUCH of NC from being eligible for this program.<\/p>\n

USDA Home Loan Requirements 2018<\/h2>\n

USDA Home Loans are no money down mortgage loans.\u00a0 To qualify, you need to meet the income caps that are set on each county.\u00a0 The income caps are based upon total household income, although there are a few things we can back out of income (like childcare).<\/p>\n

Additionally, you need to have decent credit.\u00a0<\/strong> USDA Home Loans are underwritten with an Automated Underwriting System named GUS.\u00a0 Gus is adjusted by USDA, and to get an AUTOMATIC approval, you generally need a credit score of at least 680 right now.\u00a0 There are some files that are getting approvals down to 640 credit scores<\/a>, but these files generally do not have gifts for closing costs, and they have very low debt to income ratios.<\/p>\n

If you get an automated approval, we can offer you the very best mortgage rates.\u00a0 If you don’t receive an Automated Approval – all is not lost, we can still do a Manual Underwrite USDA Home Loan.<\/p>\n

We CAN do a\u00a0Manual Underwriting\u00a0<\/a>of your USDA Loan if the Middle score of all applicants is at least 600.<\/strong>\u00a0We need some strong\u00a0Compensating Factors to ask for an approval on loans with middle credit scores between 609 and 640.<\/p>\n

Manually Underwritten USDA Home Loans generally require a proven rental record,<\/strong> meaning if you’ve been living with your folks, and you’re just now moving out on your own – this might now be the right program for you.<\/p>\n

Manually Underwritten USDA Home Loans have stricter Debt Ratio requirements<\/a>.\u00a0 Take a minute and think about it – there’s no down payment and the credit score is not that strong so they are going to require a stronger borrower.<\/p>\n

A college degree, or Job training that provides some potential for increased earnings\u00a0MIGHT be considered a compensating factor<\/strong>. \u00a0There\u2019s a pretty long list of\u00a0USDA Loan compensating factors<\/a>\u00a0that we use to help borrowers with lower credit scores, having cash left over after closing (for instance) is a pretty good way to \u201cbeef up\u201d your file and get approved. \u00a0Another factor we are seeing important for USDA Loan Manual Underwriting Approval is little to\u00a0NO Payment Shock<\/strong><\/a>.<\/p>\n

USDA Home Loan Underwriters count 1% of Student loans as a payment<\/a><\/strong>, unless we an prove that the payment is a level, equal payment pay back.\u00a0 A variable payment, one that is in deferment, anything that is not a level payment will be counted as 1%.\u00a0 If you have Student Loan debt, and need help with coming up with a down payment, you should probably look at the First Time Down Payment Loans<\/a> available.\u00a0 The Mortgage Rates are slightly higher – but you are getting to buy a house!<\/p>\n

USDA Home Loan Map Changes 2018<\/h2>\n

In addition to borrower qualifications, we also need for the home to be in the USDA Home Loan Footprint.\u00a0 USDA sets the guidelines of what they estimate a RURAL area to be.\u00a0 Look at this map, everything shaded GREEN qualifies for USDA Home Loans.\u00a0 Every county in NC has some area that qualifies for the Rural Development Housing Loan (also known as USDA).\u00a0 <\/strong><\/p>\n

In Raleigh (for instance) the USDA Home Loan Map<\/a> changes mean surrounding suburbs will no longer qualify.<\/strong>
\n\"USDA<\/a>
\nFor a home to meet the USDA\u2019s rural definition, it must be in an area that\u2019s not part of or associated with an urban area.<\/p>\n

Guidelines on definition of a qualified \u201crural area\u201d include:<\/strong><\/p>\n

Has a population that doesn\u2019t exceed 10,000, or
\nHas a population that doesn\u2019t exceed 20,000; is not located in a metropolitan statistical area (MSA); and has a serious lack of mortgage credit for low to moderate-income families, or
\nAny area that was once classified as \u201crural\u201d or a \u201crural area\u201d and lost its designation *due to the 1990, 2000 or 2010 Census<\/strong> may still be eligible if the area\u2019s population does not exceed 35,000; the area is rural in character; and the area has a serious lack of mortgage credit for low and moderate-income families.<\/p>\n

That * is the clue of what is about to change…<\/strong> USDA Home Loan Underwriters are really using “old” Census data.\u00a0 We know that when the 2020 Census is done, about 1\/3 of North Carolina will no longer qualify for the program<\/a>.\u00a0 Holly Springs, Leland, Fuquay, Belmont – lot’s of areas in NC have changed since 1990.\u00a0 Because of that, each year, USDA is looking at minor changes on the maps, based upon the highest concentration of new construction. So, instead of seeing whole Towns loose designation in the next few years, we are seeing subdivisions lose the USDA Home Loan Eligibility right now.\u00a0 I guess you could say that they are easing us into the\u00a0USDA Home Loan map changes in NC<\/a>.<\/p>\n

Houses that qualify for this program do NOT need to be farms.\u00a0 In fact if the property is thought to be income producing, we might not be able to make it work.\u00a0 So let’s not talk about boarding horses, we are growing hay for OUR horses.<\/p>\n

USDA requires that the property be located within the USDA Footprint, and then it says that,\u00a0 \u201cA non-farm tract to be purchased or improved with loan funds must not be closely associated with farm service buildings<\/a>.\u201d<\/strong>\u00a0 Well, what if you want to have a horse, or a couple of goats in the pasture outback?\u00a0 Does that count as \u201cFarm Service Buildings?\u201d<\/p>\n

If a barn can be used for this purpose without significant repair, regardless of the applicant\u2019s intended use for the structure, then it is considered a functional farm\u00a0 service structure for rural housing purposes.\u00a0 This type of farm service structure typically adds value to the subject property as evidenced by an appraisal report.<\/p><\/blockquote>\n

In a clarification,\u00a0USDA stated that outbuildings that have some functionality<\/strong>, maybe you want a place for your riding lawn mower, do not have to be considered \u201cfarm service\u201d\u00a0IF<\/strong>\u00a0the land the house is own is not income producing, and it\u2019s typical for homes in that area to have structures like that.<\/p>\n

They are also looking for Homes that meet the FHA property standards, so lead based paint<\/a>, even if it’s on the workshop will need to be removed.<\/p>\n

A few of these standards include:<\/p>\n