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USDA No Money Down Program changes
August 24th, 2010 | 
Author: USDA announced the official change in program guidelines for the 100% USDA Rural Guaranteed Home Loans officially raising the up front fee to 3.5%
A side benefit to USDA Rural Development is that they now have the authority to charge a new annual fee of up to .5 percent. This is similar to the yearly mortgage insurance premium currently charged by FHA and will make the loan very comparable to FHA if, and when, this fee is included.
According this week’s announcement from USDA, “Based on current usage, sufficient funds should be available for the remainder of the FY to fund all guaranteed refinance loans at a 0.5 percent guarantee fee.” This should be very good news for those companies funding the loans while waiting for the reauthorization of the program, like us. It wouldn’t be nice to have several of these loans on the books and then find out you need to be charging for a yearly fee also.
The darker areas above show the portion of Lane County that is not eligible for the USDA Rural Guaranteed Home Loan Program. Basically, the program is available in nearly all of Lane County that is not in the Eugene/Springfield urban growth boundary.
Rural Development is also working on a system upgrade to the “GUS” automated underwriting system that will, once again, underwrite the USDA loans online. The current system is still set with the 2% up front fee, instead of the new 3.5% fee. This is not expected to happen before October. “While the 3.5 percent up-front fee is sufficient at the current subsidy rate, we must be prepared to make adjustments in later years using the new authority for an annual fee to maintain a zero cost program.”
Low Income and Very Low Income borrowers will continue to be accommodated with a waiver of fees through the USDA Direct Loan Program.
Contact me
Navigating the mortgage approval process can be daunting. You need someone on your side. I am available right now to help you with the loan process and know the ins and outs of FHA, VA, USDA and conventional financing. If you want to buy a home using an USDA loan or refinance using VA, I am here to help. Contact me at Alpine Mortgage Planning, 1200 Executive Pkwy., Ste. 100, Eugene OR 97401, 541-342-7576/541-221-3455 cell or by e-mail. Only you can make the choice it is time to get the process started.
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With this increase in interest rates.. have you seen a significant amount of decline for loan application?
Not sure it is significant, but definitely a decrease in some application (refinance) but an uptick in purchase transactions as people realize rates are on the rise and it is time to take advantage of what we have before it is gone.