"GRAM PROGRAM OVERVIEW Guaranteed Rural Housing Loan Program UNITED STATES DEPARTMENT OF AGRICUL"
GRAM PROGRAM OVERVIEW Guaranteed Rural Housing Loan Program UNITED STATES DEPARTMENT OF AGRICULTURE RURAL DEVELOPMENT Program Highlights 100% financing. No down payment required. Property must be located in eligible rural area, typically any town with a population of 25,000 or less that is not adjacent to a large metropolitan area. No loan limits or sales price limits Income limits: 115% of U.S. median (see spreadsheet) One time 3.5% USDA Guaranteed Fee for purchase transactions and 2.25% for refinance transactions. Maximum loan amount is 103.5% of appraised value. USDA fee may be financed into loan amount regardless of appraised value Loan can include closing costs if appraisal higher than sales price No monthly mortgage insurance premium Loan Submission Highlights Lender processes loan package using own forms. USDA Rural Development requires only 1 additional form (RD Form 1980-21) to be signed by lender and borrower and included in submission package. Benefits to Lenders Loans can be purchased by Fannie Mae, Freddie Mac, Ginnie Mae 100% of the loan can be sold No imposed fee structure on lender for closing costs Loan Purpose Purchase transactions - new construction or existing dwellings are eligible Existing GRH loans may be refinanced with new GRH loan. Rate reduction only. No cashout. Other financing programs including Cal HFA and locally sponsored “silent second” programs can be used in conjunction with the GRH program. 1 Interest Rate and Terms 30 year fixed-rate, fully amortized loans only Interest rate is negotiated between the lender and borrower 2/1 buydown – qualifying ratios at note rate Property Requirements Site value should not exceed 30% of the total appraised value One-unit, non-farm, primary residences, including single family dwellings, condos, and PUDs Income producing properties are not eligible. Manufactured homes are eligible if unit is 12 months old or newer and never occupied. Unit must be placed on permanent foundation and meet all required of FMHCSS. A builder’s warranty of no less than one year must be issued to the home buyer. In-ground swimming pools only when any contributory value given to the pool is backed out of the loan amount. Underwriting, Income and Credit Requirements Qualifying ratios are 29/41. Higher ratios considered with strong compensating factors. Credit score of 660 or higher considered a strong compensating factor. Source of income must be adequate and dependable, typically with 24 month history Credit scores of 620 or higher for each applicant results in streamlined underwriting Bankruptcies to be discharged for at least 36 months, unless both applicant’s credit score is 620 or higher. Adverse credit waivers may be granted for mitigating factors such as loss of job, reduction in income and illness No cash reserves requirement Borrowers do not have to be first time home buyers No limit on seller contributions 09/2010 USDA Rural Development is an Equal Opportunity Lender, Provider, and Employer. Complaints of discrimination should be sent to: USDA, Director, Office of Civil Rights, Washington, DC 20250ing 2