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USDA Loans?


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Do you guys know anything about USDA loans? I read an ad that said:

This is the last true 100% 30 year fixed loan.

This loan has: No Mortgage Insurance

No Restriction on seller credit backs

No Credit score minimum/

No Down Payment required

No Reserve requirement

We're not kidding!

It does have Income restrictions based on 115% of the U.S. Median and it has location restrictions. What does that mean? This loan is designed to enhance and promote home ownership in the smaller communities of the U.S. What areas qualify? Too many to list here but 85% of California is eligible for this loan. Every county has some areas eligible, except one, San Francisco. Many counties are completely eligible including Tehama,Trinity,Siskiyou and others. In Shasta County only Redding is not eligible for this loan. But the boundaries are very close to the city.

If you have had a job for the last 24 Months, Have reasonable credit, and have a desire to own your home. This loan is for you.

I am just wondering if you guys could tell me more about the loan...

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We live in GA. We tried USDA and contacted them directly. They wanted a score of at least 540 across the board. Only problem was, they did not want to see one baddie on the reports. All had to be paid before loan could go through.

We only have 2 baddies to go. And one baddie in fraud dispute;which the cra's and ca's are not budging on.

Since we will be applying more than once, we will have to pay $30 next time we apply.

Ask for their man in charge of mortgage approval for your district. He will be able to tell you whether or not you need all baddies off your report or not and the score needed for your state.

Also, contact your district USDA office. They will send you a packet explaining everything to you along with an application

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Seems like false advertising then. If they originally advertise no miminum credit score (or something like that) then turn around and tell you that 640 is required.... can they do that?

Did you talk to the person in charge of over-seeing the mortgages or their receptionist? The only reason why I'm asking is we ran into the same problem here in GA. The receptionist told us it didn't matter what was on our credit reports, and the score didn't matter either. Well, the guy in charge of the mortgages told us no baddies, and score of 540 across the board.

Or, just ask for their packet. It has all kinds of info in there.

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I have had a USDA Loan for the past 27 years. Before USDA-RH it was called "FMHA" ( Farmers Home Administration).

They base your payments by your yearly income. You must update your income to them on a yearly bases. some times the payment goes up, sometimes down. The good thing is, if you have a problem on paying your mortgage, they are easy to work with.

Your payments are subsidized thru the Goverment, mostly the intrest payments. If and when you ever sell or refinance the home,they will "recapture" the subsidy payments. so make sure you find the home you really want. If you only planning to stay in the home for 5-10 years, its NOT a good idea. If you plan on staying there for 20+ years it could be a good deal for you.

My example:

Purchased home in 1984 (new) for $40,000

Total payments 360 months $145,000 (approx. @ $403.00 per month )

Total subsidy payed by the goverment 62,000 (this is still owed to them) and only if I sell or refi.

Current home value $95-100K

Current equity $38,000 (approx.)

The principle was payed off this year and my payments STOPPED, I only owe the subsidy if I SELL or REFINACE the home. They (the Goverment) cant lose.

Through-out the years my payment would go from $120.00 per month to $365.00 per month.

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