What Type of Home Can you build with a USDA Construction Loan in Florida, Texas, Tennessee, and Alabama? What are the different ways you can build a home with a USDA new construction loan?

Last week we discussed how flexible a USDA Construction Loan can be with land, and in the next part of our series, I will explain what types of homes are eligible to be built with a No Down Payment USDA singe-close construction loan.

Before we get started, if you have USDA loan eligibility questions and are looking to be qualified, make sure you are working with an experienced USDA Approved Lender such as Metroplex Mortgage Services.

Just call, text, or email to start the conversation and let our USDA lending experience go to work for you!

Call/Text: 863-593-2001
800-806-9836 Ext. 280
SeanS@MPLX.org

As a starting point, USDA guidelines define a new dwelling as one that is “under construction” to be built or a “dwelling that is less than one year old and has never been occupied.”

Additionally, although we are able to work with the USDA Single-Close No Down Payment construction to permanent feature which has an upfront closing with draws then provided to approved builders for the construction of the home, today’s topic will focus on what some may refer to as an “end loan” because it would be used to pay off any construction loan that the builder may have taken out to finance the construction of the property.

In this type of scenario, the builder is able to fund the construction of the property whereby Metroplex would then be responsible for establishing the permanent residential USDA mortgage at closing after the home has been completed.

In what situations would a USDA “end loan” apply?

In some cases, a builder has their own funding sources set up and does not want to go through an approval process as required under the USDA Single-Close feature and elects to instead complete the construction of the home with their own funds and then receive their construction proceeds at time of closing.

Additionally, if a builder has a spec home that is under construction and a buyer contracts with them to build the home, the USDA Single-Close feature would not be available since the home has already been partially constructed. In this scenario, the builder will complete the construction and then receive payment at closing as discussed above.

What are the pros and cons of this type of USDA construction loan financing?

Unlike the USDA Single-Close Construction Loan feature where the interest rate, credit, income, and qualifying has been established at the upfront closing and then draws are disbursed thereafter for the construction of the home, end loan financing requires a different approach due to completion of the home sometimes being months after the initial contract.

In these type of situations, it requires lenders to be diligent about monitoring expiration dates of the appraisal along with the borrower’s income, assets, credit, and employment.

However, because of our proven track record, we have established procedures in place to monitor the loan file and be as proactive as possible during the construction period.

Key Points – USDA New Construction Homes

As you can see, a USDA loan be used to buy a new construction home! However, it is important to ask your builder how they are structured. Will they need you to close on a construction loan in order to then receive draws to build the home or do they have their own financing where they can build the home which would allow you to wait until closing for your USDA loan to be established.

Please note that everyone’s situation is unique such as a fingerprint, so please reach out to my team for any specific questions regarding USDA new construction loans.

Remember, we are known for our USDA loan expertise – Just call, text, or email to discuss your scenario and let us show you the “Metroplex” difference.

Call/Text: 863-593-2001
800-806-9836 Ext. 280
SeanS@MPLX.org

Thank you again for forwarding and sharing today’s video with any friends, family, co-workers, or clients who are looking to buy, sell, or refinance!

As always, I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!

P.S. – You can download our “USDA Blueprint for Success” by CLICKING HERE.

What costs can be included within a USDA Construction Loan in Florida, Texas, Tennessee, and Alabama?

What are USDA Single-Close Construction Loan requirements? Can you buy land and build a home with a USDA No Down Payment Construction loan?

As a USDA construction loan lender, we receive numerous questions on this topic and in today’s short video, I will give you an introduction to the USDA one-time close construction loan process and explain how it can be possible to build a home with no down payment!

Remember, we are know for returning calls, replying to your emails, and responding to messages. Just call, text, or email with your scenario so we can show you the Metroplex difference!

Call/Text: 863-593-2001
SeanS@MPLX.org

What costs can be included within a USDA Construction Loan?

As a starting point, we commonly receive the following questions:

• What costs can you include within a USDA Construction Loan?
• Can you buy land and build a home with a USDA No Down Payment Construction loan?
• Can you build on land that you already own or purchase land with proceeds from the construction loan?

The USDA Single-Close Construction to Permanent No Down Payment loan is eligible for new single-family residences, modular, and manufactured homes and allows for draws during the construction phase which occurs after closing.

Additionally, it provides tremendous flexibility because you may either build on land that you already own or purchase land to be built on through the USDA construction loan.

USDA Construction Loan Building Guidelines

Further, unlike other programs which only allow loan amounts based on the sales price, USDA home building loan guidelines will permit financing of loan-related costs up to the appraised value of the property, with examples of those eligible costs being:

1. Land 
   • Acquisition cost of the land.
     • Land may be purchased separately from a third party or directly through the builder contract.
     • If land is purchased separately, the seller would receive their proceeds at closing as normal.
   • Payoff the balance of land to be utilized in the construction of the dwelling.
     • If the land was previously purchased and has an existing loan, funds may be used to pay off the outstanding balance owed with the remaining loan proceeds used for construction costs.
2. Construction Hard Costs
   • Costs inside the contract to be detailed on the construction budget agreed upon by the builder and borrower;
   • Costs outside of the contract, paid to subcontractors, for contributive work such as well and septic installation, roads/driveways, utility hookups, landscaping, etc.
3. Construction Soft Costs
   • Contingency Reserve;
   • Interest Reserve;
   • Survey, Permits, Plan Review Fees, Title Updates, Project review fees, and more.

In summary, please note that this is not an all-inclusive list of eligible costs, it does demonstrate the high amount of flexibility found under the USDA Single-Close New Construction to Permanent program. While you are not able to purchase raw land on its own, No Down Payment financing allows for the purchase of land along with funding for the construction of a primary residence all with the convenience of one closing prior to the construction starting.

But, before we go, I just want to thank everyone for continuing to make us your USDA lender of choice.

As a USDA Approved Lender, we will walk you through the USDA loan qualifying process step-by-step. Just call, text, or email to discuss your scenario and let us show you the “Metroplex” difference!

Call/Text: 863-593-2001
800-806-9836 Ext. 280
SeanS@MPLX.org

Thank you again for forwarding and sharing today’s video with any friends, family, co-workers, or clients who are looking to buy, sell, or refinance!

As always, I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!

P.S. – You can download our “USDA Blueprint for Success” by CLICKING HERE.

It is hard believe that another year has already passed but with that comes another milestone that we want to share. Metroplex recently celebrated our 22^nd year anniversary from when I founded the company.

Being large enough to serve you but small enough to care is as important to us now as it was from our very first day.

To all of our clients that we have helped reach the goal of homeownership and the Realtors who have placed their trust with us for over the past two decades, thank you for being part of our continued success!

As the housing market continues to change, we take great pride in being the trusted mortgage resource which so many count on for our dependability, stability, and reliability, year after year.

Remember that we are known for providing financing solutions in our rural communities which include:

• USDA No Down Payment Loans
• USDA New Construction Loans
• USDA Repair and Renovation Loans
• Manufactured Home Loans
• VA No Down Payment Loans

As a USDA and VA Approved Lender, we will walk you through the qualifying process step-by-step. Just call, text, or email to discuss your scenario and let us show you the “Metroplex” difference!

Call/Text: (863) 593-2001
800-806-9836 Ext. 280
SeanS@MPLX.org

If you know of anyone who needs mortgage qualifying assistance, we would love to count on you for that next referral so we can help yet another family!

Thank you again for forwarding and sharing today’s video with any friends, family, co-workers, or clients who are looking to buy, sell, or refinance!

As always, I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!

P.S. – You can download our “USDA Blueprint for Success” by CLICKING HERE.

How do you qualify for a USDA Construction Loan in Florida, Texas, Tennessee, and Alabama?

What are USDA Single-Close Construction Loan requirements?

As a USDA construction loan lender, we receive numerous questions on this topic and in today’s short video, I will give you an introduction to the USDA one-time close construction loan process and explain how it can be possible to build a home with no down payment!

Now, before we get started, don’t forget to take advantage and download our USDA Blueprint for Success with the link below. This free guide is designed to walk you through the process step-by-step and is a great tool for both homebuyers and Realtors alike.

How do you qualify for a USDA Construction Loan in Florida, Texas, Tennessee, and Alabama?

USDA construction loans fall within the Combination Construction to Permanent Loans section of the 3555 USDA Handbook which provides for the following description of their USDA Single-Close feature:

“A single-close loan combines the features of a construction loan, which is a short-term interim loan for financing the cost of construction, and the traditional long-term permanent residential mortgage.”

Once an eligible applicant has been properly qualified, here is what can be expected under the USDA Single-Close program:

1. Look for land and work with a builder on construction costs to fit their budget
2. Once land and builder have been selected, the appropriate contracts would be executed
3. This would be followed by loan application, appraisal, underwriting, and obtaining the USDA commitment
4. Once all conditions are satisfied then the closing is scheduled.
5. Builder/Contractor must meet USDA eligibility requirements and be approved prior to closing
6. Remember, closing occurs prior to the start of construction with the single-close program and because there is only one closing this saves substantial costs.
7. At closing, funds are disbursed to cover land acquisition, construction costs, and permanent mortgage funding.
8. Construction begins and draw payments are administered as the build-out progresses

USDA Construction Loan Summary:

No Down Payment! – While many banks require a 20% down payment for a construction loan, USDA loans allow for “No Down Payment” which is the same for both existing and new construction homes.

USDA Eligible Areas – USDA qualifications for property location eligibility remain the same, which means that the property must be located within a USDA designated eligible area.

USDA Income Limits – USDA has county income limits which are based on household size. These will still apply as they do with existing construction home. However, remember that USDA has recently increased these county limits which allows for increased income limits which can work with on a variety of price ranges.

Flexible Credit Qualifying – Although minimum credit qualifying conditions must be met, the USDA program offers extremely flexible credit qualifying with reduced waiting times for prior bankruptcies, foreclosures, and short sales when compared to conventional underwriting guidelines.

As with any home purchase, understanding your budget upfront is always critical so getting properly qualified by an approved USDA Approved Lender is a the crucial step that helps to iron out details such as monthly payment, construction budget, and land costs.

Remember to just call, text, or email to discuss your scenario and let us show you the “Metroplex” difference!

Call/Text: 863-593-2001
(800) 806-9836 X 280
SeanS@MPLX.org

Thank you again for forwarding and sharing today’s topic with any friends, family, co-workers, or clients who are looking to purchase or build a home!

P.S. – Click here to download your FREE USDA Blueprint for Success!

What are USDA Student Loan Guidelines for Calculating Monthly Payments? How can the updated USDA Student Loan Guidelines help you purchase a home in Florida, Texas, Tennessee, or Alabama?

As many of us know, student loan debt can have a major impact on qualifying for a mortgage!

Understanding the improved monthly payment calculations for USDA student loan guidelines can mean the difference between homeownership and a missed opportunity!

In today’s short video, I will review updated USDA student loan guidelines and break down the calculations so you will be in the know.

Now, before we get started, don’t forget to take advantage and download our USDA Blueprint for Success with the link below. This free guide is designed to walk you through the process step-by-step and is a great tool for both homebuyers and Realtors alike.

Unfortunately, the fact is that qualifying to buy a home with student loan debt is becoming a bigger challenge each and every day, and this is not just a problem for First-Time Homebuyers. While many of us may say that seems like common sense, the actual numbers are somewhat staggering.

In a recent Federal Reserve report, it listed that total student loan debt is now more than $1.7 trillion! Now, after we all have taken a deep breath, let’s review the improved USDA student loan guidelines for calculating student loan monthly payments.

USDA Student Loan Guidelines – Payment Calculations

USDA Student Loan Guidelines require that lenders use the following payments for outstanding student loans, regardless of payment status:

• The payment amount reported on the credit report or the actual documented payment, when the payment amount is above zero; or
• One half (.50) percent of the outstanding loan balance documented on the credit report or creditor verification, when the payment amount is zero.

For example purposes, let’s look at the following scenarios:

Ex. 1:  $20,000 owed in student loan debt and the payment amount reported on the credit report was $75.00.

Since that amount is above zero, we would use $75.00 as the monthly amount against their debt-to-income ratios.

Remember that debt-to-income ratios compare total monthly expenses against monthly income and are used in determining overall loan amount eligibility.

Ex. 2: $10,000 is owed on a student loan and the verified monthly payment amount is $0. In this case, the monthly payment would be calculated by taking the $10,000 X .50% = $50.00 per month as the student loan payment.

Additional USDA Student Loan Guidelines

USDA student loan guidelines provide for the following:

• Student loans in the applicant’s name alone but paid by another party remain the legal responsibility of the applicant. The applicable payment must be included in the monthly debts.

• Student loans in a “forgiveness” plan/program remain the legal responsibility of the applicant until they are released of liability from the creditor. The applicable payment must be included in the monthly debts.

Summary – USDA Student Loan Guidelines

In summary, USDA student loan guidelines continue to improve, but understand that regardless of your loan status, a minimum monthly payment will be calculated even if no payment is currently due.

USDA Approved Lender

As a USDA Approved Lender, we will walk you through the USDA loan qualifying process step-by-step. Just call, text, or email to discuss your scenario and let us show you the “Metroplex” difference!

Call/Text: 863-593-2001
800-806-9836 Ext. 280
SeanS@MPLX.org

Thank you again for forwarding and sharing today’s video with any friends, family, co-workers, or clients who are looking to buy, sell, or refinance!

As always, I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!

P.S. – You can download our “USDA Blueprint for Success” by CLICKING HERE.

Do USDA loans allow homes with an Accessory Dwelling Unit in Florida, Texas, Tennessee, or Alabama?
Can you buy a home with a mother-in-law suite with a USDA loan?

As families continue to search for affordability and review available inventory, we commonly receive scenarios asking whether a USDA loan can be used to purchase a home with an Accessory Dwelling Unit (“ADU”) and if that will be considered a USDA eligible property.

In today’s short video, we will explain the details and break down how a USDA loan can be used to purchase a home with an Accessory Dwelling Unit throughout Florida, Texas, Tennessee, or Alabama.

Also, don’t forget to take advantage and download our USDA Blueprint for Success with the link below. This free guide is designed to walk you through the process step-by-step and is a great tool for both homebuyers and Realtors alike.

Do USDA loans allow homes with an Accessory Dwelling Unit in Florida, Texas, Tennessee, or Alabama?

As a starting point, USDA guidelines require that a “qualified property must be predominately residential in use, character, and design” and do not permit “buildings principally used for income-producing purposes” which includes multi-unit properties that are designed to generate income.

With that being said, a home with an Accessory Dwelling Unit, commonly referred to as a mother-in-law suite, can be an eligible property type provided it meets the following USDA definition and guidance:

USDA Loan Accessory Dwelling Unit (“ADU”) Guidelines

“An Accessory Dwelling Unit (ADU) refers to a habitable living unit, within, or detached from a single family dwelling, which together constitute a single interest in real estate. The presence of a single ADU does not automatically render the property ineligible.

 The appraiser will determine if the ADU represents a second single family housing dwelling unit. The appraiser must consider all property characteristics, specifically the status of the utilities, if they are separate, and the property’s highest and best use, when making this determination. The appraiser will include their evaluation in the site analysis and highest and best use section of the appraisal report, as applicable.

 ADU’s which function in support of the household members, such as multigenerational households are consistent with SFH, however those designed to create a potential rental income stream are not. The expectation would be that those spaces would not be separately metered for utilities or have a separate address.”

 Summary – USDA Loans to purchase a home with a Mother-In-Law Suite

In summary, provided an ADU is in compliance with zoning laws and building codes, a USDA loan can be used for the purchase of property with an

Accessory Dwelling Unit but the appraiser must determine that the property constitutes a single interest in real estate that is there to support the household members and not a second housing unit designed to create an income stream such as a tenant paying rent.

As a USDA Approved Lender, we will walk you through the USDA loan qualifying process step-by-step. Just call, text, or email to discuss your scenario and let us show you the “Metroplex” difference!

Call/Text: 863-593-2001
800-806-9836 Ext. 280
SeanS@MPLX.org

Thank you again for forwarding and sharing today’s video with any friends, family, co-workers, or clients who are looking to buy, sell, or refinance!

As always, I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!

P.S. – You can download our “USDA Blueprint for Success” by CLICKING HERE.

What are USDA Loan flood insurance requirements? How do Flood Insurance Maps affect USDA Loan eligibility in Florida, Texas, Tennessee, and Alabama? These are great questions, because the topic of flood zones and USDA eligibility can create confusion during the process!

We commonly deal with situations where USDA eligible properties may be affected by existing flood insurance maps  In today’s video, I will explain how flood insurance maps affect USDA loan eligibility in Florida, Texas, Tennessee, or Alabama , if additional structures require flood insurance, and the required flood insurance coverage amounts.

Now, if you have not yet done so, please download our FREE USDA Blueprint for Success. This free guide is designed to help walk you through the USDA process step-by-step, and is a great educational resource for both homebuyers and their Realtors alike.

Flood insurance maps are maintained by FEMA and are used to show how likely it is for an area to flood. They are also available to help understand areas with the highest risk of flooding. FEMA states the following regarding flood maps:

“Flood maps help mortgage lenders determine insurance requirements and help communities develop strategies for reducing their risk. The mapping process helps you and your community understand your flood risk and make more informed decisions about how to reduce or manage your risk.”

USDA flood insurance requirements for properties located in a Special Flood Hazard Area (SFHA) are different for existing dwellings versus new or proposed construction properties.

In today’s post we will only be covering USDA flood insurance requirements for existing dwellings. If you do have any USDA new construction loan questions, please call my team so we can assist!

USDA Loan Flood Insurance Requirements for Existing Dwellings

Once it has been determined that property is located in a Special Flood Hazard Area (“SFHA”) in accordance with the National Flood Insurance Reform Act of 1994, USDA guidelines state the following:

“Existing dwellings located in flood zones are eligible under the SFHGLP if flood insurance, through FEMA’s National Flood Insurance Program (NFIP), is available for the community and flood insurance whether NFIP, “write your own,” or private flood insurance, as approved by the lender, is purchased by the borrower.”

Additionally, guidelines require that:

“Insurance must be obtained as a condition of closing and maintained for the life of the loan for existing residential structures when any portion of the structure is determined to be located in a SFHA, including decks and carports, etc.”

Do additional structures on the property also require flood insurance?

There is good news for this question! The Homeowner Flood Insurance Affordability Act (HFIAA) of 2014 states:

“flood insurance is not required for any additional structures that are located on the property but are detached from the primary residential structure and do not serve as a residence, such as sheds, garages, or other ancillary structures.”

USDA Loan Flood Insurance Requirements

USDA Minimum Required Flood Insurance Coverage Amount

USDA loan flood insurance guidelines require the applicant to obtain flood insurance when the property is located in a Special Flood Hazard Area (“SFHA”) as determined by the applicable flood insurance maps.  USDA loan flood insurance guidelines require the following minimum coverage:

“Flood insurance must cover the lesser of the outstanding principal balance of the loan or the maximum amount of coverage allowed under FEMA’s National Flood Insurance Program (NFIP).”

USDA Loan Flood Insurance Maximum Deductible

USDA guidelines also provide for the following maximum flood insurance deductible amounts:

“Unless a higher amount is allowed by state or federal law (which includes FEMA policies), the maximum deductible clause for a flood insurance policy should not exceed the greater of $1,000, or one percent of the face amount of the policy, or the minimum deductible offered by the borrower’s chosen insurance carrier. Existing dwellings for the SFHGLP are eligible if flood insurance is available.”

(SFHGLP stands for the Single Family Housing Guaranteed Loan Program.)

USDA Loan Eligibility – Flood Insurance Maps Summary

Please remember that today’s topic is not an exhaustive list of USDA loan flood insurance requirements.  However, it does help explain how flood insurance maps affect USDA loan eligibility in Florida, Texas, Tennessee, and Alabama under the USDA Single Family Housing Guaranteed Program.

If you are trying to qualify for a USDA loan in Florida, Texas, Tennessee, or Alabama, do not let USDA flood insurance requirements overwhelm you! It is important to remember the basics and understand that USDA loan eligibility for properties requiring flood insurance applies a common sense approach.

Additionally, understand that while it is possible to qualify for a USDA loans with a property located in a flood zone:

• certain flood insurance coverage requirements will apply, and
• certain flood insurance deductibles will be required.

What are the benefits of working with a USDA approved lender?

The USDA loan program can be extremely powerful when you are working with a USDA approved lender that understands the program and has the experience to maximize its potential.

As a USDA approved lender, we are here to help you understand how food insurance maps affect USDA Loan eligibility in Florida, Texas, Tennessee, and Alabama.  This includes explaining USDA flood insurance requirements and walking you through the USDA loan eligibility process step-by-step.

Just call or email to discuss your scenario and let us show you the “Metroplex” difference.

800-806-9836 Ext. 280
SeanS@MPLX.org

I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!

P.S. – You can download our “USDA Blueprint for Success” by CLICKING HERE.

Can a USDA No Down Payment Loan Finance an Adjoining Lot in Florida, Texas, Tennessee, or Alabama?

When working in rural areas, it can be common to have properties where there is a vacant lot next door to the home you want to purchase. The next question is whether a USDA No Down Payment Loan can be used to finance that adjoining lot.

However, realtors and homebuyers must be cautious because there is tremendous misinformation spread on today’s topic. In today’s short video, I will separate fact from fiction and explain how a USDA No Down Payment Loan can be used to finance an adjoining lot in Florida, Texas, Tennessee, or Alabama.

If you have not yet done so, don’t forget to download our USDA Blueprint for Success with the link below. This Free Guide is designed to help walk you through the USDA process and is a great educational resource for both homebuyers and the real estate community!

Can a USDA No Down Payment Loan Finance an Adjoining Lot?

Current USDA guidelines provide flexibility for buyers and sellers who want to finance  vacant lots or parcels that are connected to the property.

While it is possible for a USDA No Down Payment Loan to finance an adjoining lot, there are recommended steps along with USDA guidelines that must be followed.

How do you finance the lot next door when purchasing a home with a USDA Loan?

While this is not a comprehensive list, here are key points to remember when a using a USDA No Down Payment Loan to finance an adjoining lot:

1. The lots must be adjoining (connected).
2. If the lots have not yet been combined, you must separately list each parcel ID on the same sales contract.
3. The appraiser will include both parcels in the value.
4. The total site size must…
   • Be typical for the area,
   • Be predominantly residential in use, character, and appearance,
   • And the site must NOT have land or buildings principally used for income-producing purposes.
5. Both lots will need to be included in the final survey.

Please remember that USDA guidelines require that “Vacant land or properties used primarily for agricultural, farming or commercial enterprise are ineligible” and that a “qualified property must be predominantly residential in use, character and appearance.”

USDA Flexibility

In summary, while USDA loans can be flexible when trying to include an adjoining lot, other loan programs or lenders may require the parcels to already be combined prior to the sales contract being executed and/or the appraisal being completed.

As rural housing experts, rely on our expertise and clear communication to help navigate this type of transaction

USDA Approved Lender

We realize that qualifying for a USDA Loan may seem overwhelming, but we offer the unique experience and expertise to help with each step of the process. Additionally, as a USDA approved lender we have the dedicated experience and expertise to help maximize your qualifying ability and make the most out of this powerful program.

Remember to just call or email to discuss your scenario and let us show you the “Metroplex“ difference.

Email: SeanS@MPLX.org
Call: (800)806-9836 Ext. 280

As always, I want everyone to make it a great day and I look forward to seeing you right here for next week’s USDA Video Tip!

So, do you know if there is PMI on a USDA Loan?

When you compare a USDA loan to an FHA loan, it is important to understand the terminology and how the different borrowing costs can affect your budget and the price of the home you may qualify for.

In today’s short video, we will break down the differences and explain if there is PMI on a USDA Loan. I will also keep you in the know about terminology and key differences between USDA, FHA, and Conventional loans.

If you have not yet done so, please download our USDA blueprint for success with the link below. This free guide is a great resource to walk you through step by step through the USDA qualifying process.

Is there PMI on a USDA Loan in Florida, Texas, Tennessee, or Alabama?

As a starting point and to clarify, PMI (private mortgage insurance) exists on conventional loans in cases of less than 20% down payment and it has a variety of different ways of how it can be paid.

Also, under the Homeowner’s Protection Act, PMI can be terminated either by request or automatically when your balance is paid down to or below 80% of the original home value.

Now, MIP (mortgage insurance premium) is found on FHA loans and is paid monthly.

Also, remember that when you have less than 10% down payment on an FHA loan, you will be required to pay the mortgage insurance for the life of the loan.

With down payments of 10% or greater, FHA mortgage insurance will be removed after 11 years.

However, in the case of USDA Loans, they do not technically have mortgage insurance, but instead, have an annual fee and even though it is for the life of the loan, it happens to be over two times lower than that of FHA’s monthly mortgage insurance!

Here is an example to help show you the difference in monthly costs between FHA and USDA:

FHA: .85% X $100,000 = $850 / 12 = $70.83 per month

USDA: .35% X $100,000 = $350 / 12 = $29.17 per month

Yes, it is true, even though USDA loans allow for NO Down payment their borrowing costs are better when compared to FHA which requires a minimum down payment.

And don’t forget that your closing costs can be financed with a USDA loan when the appraised value is higher than your purchase price, which is a benefit that FHA will not allow.

Whether it be FHA, VA, USDA, or Conventional – Just call or email to discuss your scenario and let us show you the “Metroplex” difference.

800-806-9836 Ext. 280
SeanS@MPLX.org

Just call or email if you have any qualifying questions, want to discuss a new scenario, or would just like to take advantage of our free 2^nd opinion service which is great for those existing transactions.

I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!

Remember, you can download our “USDA Blueprint for Success” by CLICKING HERE.

In today’s video, I will explain how the USDA program can maximize your home loan qualification and also break down the different ways you can obtain a USDA Loan Approval.

However, before we get started, don’t forget to download our USDA Free Resources which is a great starting point for valuable USDA tips, understanding guidelines, and further explanations on proper qualifying steps.

What are the different ways you can get USDA loan approval?

As a USDA approved lender, we offer in-house underwriting which is a tremendous advantage to the USDA loan approval process. When underwriting a USDA loan, we will look at both automated and manual USDA loan approval types.

Automated Underwriting

As a starting point, the Guaranteed Underwriting System (GUS) was developed as the automated underwriting system (AUS) to automate the process of approving USDA Guaranteed Loans. As defined by the USDA:

“GUS is a tool that helps evaluate the credit risk of the loan request. It compliments, but DOES NOT replace the considered judgment of experienced underwriters”

If the minimum credit score is met combined with the applicant obtaining an “Accept” response through the underwriting system, it can provide the following benefits:

• Reduced documentation requirements which can help improve processing time;
• Higher Debt-to-Income Ratios which equals higher a higher USDA qualifying sales price;
• Exceptions for Previous Adverse Credit History; and
• Eliminating the need for Verification of Rental History.

Remember that not all lenders utilize the GUS system so make sure you are working with a USDA Approved Lender who knows how to maximize the benefits offered by this unique program!

Manual Underwriting

When the GUS Eligibility response is either a “Refer” or “Refer with Caution”, a more stringent review of the loan file will be required under USDA manual underwriting guidelines. Manual USDA loan approval is more rigorous and document intensive, but we are more than willing to go to bat for our borrowers!

Manual underwriting can allow for the following:

• Lower Credit Score Requirements;
• Use of Non-Traditional Credit such as Utility Bills, Rental History, etc.;
• Limited Credit History; and
• Exceptions for Bankruptcy, Foreclosure, and Short Sale Waiting Periods.

Please note that Manual Underwriting for USDA loan approval is NOT offered by all lenders. When properly utilized, manual underwriting is an important tool that can provide the ability for USDA loan approval!

Reminders

As a USDA approved lender, we also understand that every scenario is different and not everyone fits into a certain box, which is why it is so important to know all the ways you can get USDA loan approval.

Remember, we are just a phone call away! If you are in need of a USDA approved lender who has experience and expertise, just simply call (800) 806-9836 Ext 280 or email SeanS@MPLX.org and we’ll show you the “Metroplex “difference!

As always, I want everyone to make it a great day and look forward to seeing you right here for the next tip of the week!