Arkansas USDA Rural Development home loans: AR mortgage rates and home loans

Rural Development Loans

How many loan programs can you think of that offer over 100% financing? A Rural Development loan actually allows homebuyers in most areas of the country to receive up to 102% financing of the appraised value – not the sales price - with no money down and no mortgage insurance required! This is a 100% program on steroids!

Here are some of the many advantages of a Rural Development loan.

30 year fixed rates
102% financing of the appraised value! = Agree on a purchase price, put the cost of a new roof and closing costs on top of the purchase price and close as long as the appraised value is high enough to cover everything.
No Mortgage insurance. If you don’t know what this is, please see our report titled “What is PMI?”.
You do not need to have thousands of dollars saved up. Over 60% of our clients using this program purchase a home with less than $300 of their own money. In many cases, they get into their home with no money at all!
Unlimited seller concessions. Most loan programs cap seller contributions to the buyer from 3% to 6% of the sales price.
Unlimited gift funds.
This loan is assumable. If buyers want your house when you sell it, they can take over your loan as long as they qualify. This can be a great selling point if rates go up over the years.
No down payment assistance programs are needed as closing costs can be financed into the loan amount.
No Homebuyer Education course is required.
There is no prepayment penalty if the house is sold or refinanced.

In addition to the “over the top” financing offered by a Rural Development loan, buyers can benefit from the 2/1 Buy Down to save money the first 2 years. For instance, if the interest rate on the 30 year fixed rate is 6.000%, the first year the rate would be 4.000%. The second year the rate would be 5.000%. The third year through the rest of the loan is the 6.000% fixed rate. This is not an adjustable rate mortgage, rather a 30 year fixed rate with some relief at the beginning.

Below are some of the guidelines for Rural Development Loans.

There are income limits based on the county the property is located and the number of people in the household. The more people living in the house, the higher the income limit is.
A 2 year employment history needs to be documented. If there are gaps in employment, a simple explanation letter needs to be supplied . . . “I was in college from MM/YYYY to MM/YYYY.”
The borrowers can not own other real estate within 50 miles of the subject property.
No Collections in Past 12 Months
No Outstanding Tax Liens
No Bankruptcies in Past 36 Months
Debt to income ratios (DTIs) can not exceed 29/41. The house payment can not be more than 29% of your gross monthly income. All bills, such as the house payment, credit cards, car loans, and student loans can not exceed 41% of the gross monthly income.
Property Location – highly populated areas typically will not qualify. If you have a property picked out, call us to see if it is located in an eligible area. It only takes minutes.
Property Condition - The house does not have to be in perfect condition. If the house has holes in the roof or the floor is caved in, it probably won’t qualify.

The “Magic 620”.

Well qualified buyers have it even easier! If the borrower’s credit score is over 620, many of the above loan guidelines can be bypassed. For instance, a borrower can be 2 months out of a Chapter 13 bankruptcy and still qualify if his credit score is 620 or higher. The debt to income ratios can also be waived if the borrower’s credit score is above 620.

Other items can not be waived. These include the income limit, property location and property condition to name a few.

No Credit Scores

If the borrower has no credit scores, this does not disqualify him. Many times we can use 3 alternative trade lines to qualify the borrower. An alternative trade line is an item the borrower makes payments on, but typically doesn’t report to the 3 credit bureaus, such as rent, utilities, car insurance and cell phones. There are many other items that can be used. The items above are the most common.

This is truly a special mortgage product. Bill Evans at Express Mortgage, LLC is extremely knowledgeable in this product as well as many others. Give him a call today at 479-530-4569 or 866-530-4569 to discuss your RD mortgage options.