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USDA Loans. 0% Down, 6% Seller Closing Credit Allowed!

Buy a house in a designated USDA eligible area with no money down

With Millennial Home Loans quick online loan application, determining if you qualify for a USDA Loan and for how much, has never been easier.

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USDA Loans Program Guidelines

Loan Purpose

  • Purchase
  • One-time Close Construction Loan
  • Rate-term refinance for existing USDA Loans

Credit Profile

  • 620 minimum middle credit score for all borrowers on the loan – purchase
  • 640 minimum middle credit score for all borrowers on the loan – one-time close construction loan
  • No foreclosure, short sale, or Chapter 7 bankruptcy discharge within three years of contract ratification date on credit report not permitted
  • Minimum of two tradelines on credit, with a positive pay history within the most recent 12-month period. Accounts can be open or closed
  • If two tradelines aren’t on credit, alternative tradelines can be
  • No mortgage delinquency in the last 12 months for a USDA-to-USDA Refinance

Loan Amount

  • No maximum loan amounts

Commitment Fee/Monthly Annual Fee

  • USDA charges a 1% Commitment Fee
  • Commitment Fee can be financed into the loan
    Example:
    Purchase price - $100,000
    Base Loan amount - $100,000
    Commitment Fee - $1,010 ($100,000 [purchase price] /.99 - 100,000)
    Maximum financed loan amount = $101,010
  • USDA requires a monthly Annual Fee (i.e. mortgage insurance premium) with an annual factorial of .35%

Ratios

  • 33.99/45.99% (DTI) with GUS Accept/Eligible underwriting findings
  • 29/41% debt-to-income (DTI) with GUS Accept/Refer underwriting findings and credit score less than 679
  • 31.99/42.99 with GUS Accept/Refer underwriting findings and credit score greater than 680 and with compensating factors such as:
    • 680 or higher credit score
    • No or low "payment shock" - less than a 100% increase in proposed mortgage payment Vs. current rental housing expenses
    • Fiscally sound use of credit
    • Ability to accumulate savings
    • Stable employment history with 2 or more in current position or continuous employment history with no job gaps
    • Cash reserves available for use after settlement
    • Career advancement as indicated by job training or additional education in the applicants profession
    • Trailing spouse income - as a result of a job transfer, the house is being purchased, prior to the secondary wage-earner obtaining employment. If the secondary wage-earner has an established history of employment and has a reasonable chance to obtain new employment in the area
    • Low total debt load

Property Type

  • Must be located in an eligible USDA Rural Development Location
  • Owner-occupied properties
  • Existing attached and detached single-family residences
  • New construction with permanent financing only
  • PUD's (i.e. Townhomes)
  • Condo-units. HUD, VA, FNMA or FHLMC approved project
  • Log cabin homes, provided Appraisal Report lists other comparable log cabin homes that have recently sold in the area

Occupancy

  • Owner occupied only
  • All borrowers on the loan must have ownership in and occupy the property
  • No co-signers permitted

Property Valuation

  • Full USDA appraisal with interior inspection and photos

Documentation

  • All loans must be fully documented per Agency Guidelines
  • For Self Employed borrowers, in addition to Agency Guidelines, two years of the tax returns (personal and business) along with a year-to-date profit and loss (unaudited)

Down Payment/Closing Costs

  • 0% down payment required
  • Seller contribution toward buyers closing costs up to 6% of the purchase price
  • Closing cost help can come from flexible sources including family member gifts and loans against a 401k retirement account
  • If the appraised value of the property exceeds the purchase price, the difference can be used to cover closing costs

Terms

  • Amortization period: 30-year fixed rate

Existing Properties Owned

  • USDA primarily often won't allow applicants to own other properties
  • Exceptions include when the other property owned is:
    • Not owned in the local commuting area as the new property; or
    • Not structurally sound and/or functionally adequate
    • Manufactured home not on a permanent foundation