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    USDA LOAN - HOME BUYER CHECKLIST

    USDA INCOME AND GEOGRAPHIC ELIGIBILITY GUIDELINES - GENERAL

    Must be in an eligible USDA Rural Development Location. To determine if the property is in an eligible USDA area follow these instructions:
    • Go to the USDA Rural Development Website
    • On the left hand side tool bar, under “Property Eligibility”, click “Single Family Housing”
    • Click “Accept”
    • Enter property address to determine if a specific house is located in an USDA eligible area
    County specific income guidelines. Reference the USDA website for adjusted household income limits

    BORROWER SPECIFIC

    Borrower Type Allowed
    • U.S. citizens
    • Permanent resident aliens
    • First time home buyers allowed
    • Non-occupant co-borrowers NOT allowed
    Loan Amount – Minimum & Maximum
    • Minimum loan amount: $80,000. (Note, this is an internal lender guideline. The USDA Loan program has no minimum loan amount guideline. If you are purchasing a house with a price less than $80,000 contact other lenders to determine if they will service your mortgage requirements.)
    • Maximum loan amount: No limit. The maximum loan amount that a borrower can qualify for will be determined by the borrowers debt to income ratio and Guaranteed Underwriting System’s findings
    Minimum Credit Score
    • Middle Credit Score – 640 for each applicant for GUS automated underwriting approval
    • Middle Credit Score – 580 for each applicant for manual underwriting approval and a documentable rent history within the last 12 months.
    Multiple Property Ownership
    • USDA Rural Development 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;
      • Not structurally sound and/or functionally adequate
      • Manufactured home not on permanent foundation
    Qualifying Ratios
    • 29/41% debt-to-income (DTI) – Target
    • 34/46% debt-to-income (DTI) – 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 years 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

    OBTAIN A LOAN PRE-QUALIFICATION LETTER

    At Bridgeview Bank Mortgage our focus is on getting USDA Loans approved. This means Bridgeview Bank Loan Officers will perform a high level of due diligence when pre-qualifying a borrower for a mortgage, which includes:

    • Obtaining a credit report from all three credit bureaus
    • Verifying income documents, including W-2’s for the last two years, recent paystubs, and tax returns for the last two years if the borrower is self employed
    • Verifying asset documents for the last two months
    • Preliminary approval is run through USDA Guaranteed Underwriting System or GUS
      Prior to issuing a loan pre-qualification letter, at a minimum the Loan Officer should verify the following:
    • Full tri-merge credit report
    • Income verification which includes paystubs and the last two years of W-2 statements
    • For self-employed borrowers full review of previous two years of tax returns
    • Application processed through USDA Guaranteed Underwriting System (GUS).

    If your Loan Officer is not processing your loan request through GUS, find yourself a new Loan Officer. At Bridgeview Bank all loan pre-qualification letters are processed through GUS

    To get started on your USDA Loan, you can submit an online loan application or call (866) 552-5912. If you meet Bridgeview Bank investor guidelines, you will be emailed a loan pre-qualification letter and an analysis of your monthly mortgage payment and estimated closing costs.

    PROPERTY SPECIFIC

    Eligible Properties

    • Existing attached & detached single family residences
    • New construction with permanent financing only
    • PUD’s (i.e. Townhomes)
    • Condo-units. HUD, VA, FNMA or FHLMC approved project

    Ineligible Properties

    • Co-ops
    • Mixed-use
    • Condotels
    • Manufactured homes
    • Log cabin homes
    • Single Family Homes where the land value exceeds 30% of the appraised value AND can be sub divided.
    • House not in move-in condition (i.e. no “fixer-uppers”)
    • No income producing properties
      • Agriculture structures
      • Outbuildings that sync up with home buyers skill set (i.e. large garage with car lift being sold to an auto mechanic)
      • Ability to rent portion of the house
        • Separate living areas with dedicated entrances
        • Kitchenettes
        • Duplex

    If land value based on the appraisal report exceed 30% of the appraised value:

    • Land can’t be subdivided
    • Appraiser must indicate lot size is normal for the area

    If the property is on well and septic

    • 75 feet between well head and septic tank (can be 50 feet if approved by County)
    • 100 feet between well head and septic drain field
    • Well head must be at least 10 feet from adjoining property line and roadway

    STRUCTURING THE TRANSACTION

    Down payment Requirement

    • No down payment is required
      If borrower has adequate liquid assets (i.e. 20% of the property purchase price) to obtain conventional financing the borrower may be ineligible for the USDA Rural Development Loan

    Seller Contribution

    • No down payment is required

    PROPERTY INSPECTIONS

    • Home inspection are recommended but not required by the loan program
    • Appraisal report – approximate cost $495
    • Pest inspection (if stipulated in the sales contract) – approximate cost $75 to $100
    • Water test (if the property is on well water) – approximate cost $150 to $300
    • Septic certification (required if the appraiser is unable to determine the distance between the well head and septic tank/drain field) – approximate cost $100
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