Guidelines

RURAL DEVELOPMENT (RD)

GUARANTEED RURAL HOUSING PRODUCT MATRIX

****TO ENSURE USDA ELIGIBILITY FOR PROPERTY & INCOME~CHECK

THE FOLLOWING SITE:

All income eligibility must be checked at:

http://eligibility.sc.egov.usda.gov

All properties must be checked for eligibility at:

http://eligibility.sc.egov.usda.gov

PROGRAM BENEFITS

Financing

103.50% financing based on appraised value purchases, 101.00% on Refi’s

Term

30-year fixed Only, No 15 year fixed or ARMs available

Refinance Option

***Must be USDA loan now***

Yes – Rate reduction only – no cash back – Reduced Guarantee Fee of 1.00%

Only existing GRH loans are eligible for refinance

Mortgage insurance

No monthly mortgage insurance. One-time guarantee fee of 3.50% Purchases 1.00% Refi’s

Payment reserves

No payment reserve requirements. **May be required case by case**

Down payment/Grants

No downpayment required. Grants allowed, please contact us for approval in advance

First-time homebuyer

No First-time homebuyer requirement

Seller concessions

No maximum. If greater than 6%, comment from the appraiser required

Gifts

Grants

Leased Land

100% gifting permitted. Donor required to be family member

City, County, State, or Federal Grants OK. Must be approved by CNB prior to loan submission

Leased Land OK if lease >33 years and approved in advance by CNB

INCOME AND RATIOS

Ratios

29/41 – exceptions encouraged with compensating factors and RD concurrence

(Comp factors: Credit, 0% Payment Shock, Disposable Income) Exception max is 49%

`Non-occupant Co-borrower

Non-occupant co-borrowers not permitted. All borrowers must live in residence.

Installment debt

Include all installment debt greater than 6 months

Primary income

Two-year history

Self-employment

Two-years 1040s and YTD P&L~***P & L’s MUST BE PREPARED & SIGNED BY LICENSED

CPA &/OR LICENSED TAX PREPARER***

Alimony/child support

12-month history, with proof of 3 years continuance

Part-time, Over-time & Bonus, Com.

24-month history

Disability benefits

Benefits letter , 3 years continuance and gross up 115% &/OR 125% ~** SEE TAX BRACKET

CHART TO DETERMINE**

SSI benefits

Awards letter or 2 months bank stmts, 3 years continuance and gross up 115% & OR 125% ~***SEE

TAX BRACKET TO DETERMINE***

Salary increases

Salary increases within 30 days of the first payment due date ***on a case by case basis***

Maximum income

Use RD Moderate Income Limits

http://eligibility.sc.egov.usda.gov

CREDIT

Credit score/

NO SCORE

620 Minimum Score for all borrowers.

TRUE NO SCORE~ A BORROWER WITH ONLY 1 CREDIT SCORE OR NO CREDIT SCORES. TO BE

ELIGIBLE FOR A TRUE NO SCORE PROGRAM THERE CAN BE NO DEROGATORY CREDIT PAST

OR PRESENT, THE BORROWER MUST HAVE 3 ALT TRADES, 4 ALT TRADES IF NO RENT

INFORMATION IS AVAILABLE. IF VERIFIABLE 12 MONTH RENTAL RATING THEN 2 ALT TRADES

& RENT HISTORY. THE RENTAL RATEING MUST COME FROM A MANAGEMENT COMPANY OR

12MONTHS CANCELLED CHECKS. ALL ALT TRADES MUST BE MONTHLY PAID IN NATURE IE

UTILITES, FOR A 12 MONTH PERIOD AND PROVIDED ON AN ALT CREDIT REPORT***

Credit Bureau Trades

Late payments

We require at least 2 credit scores. Minimum middle score is 620. We must have 3 seasoned trades

(12 mo or more). If there are not 3 seasoned we will required 3 alternative trades of which one must

be a verifiable 12 month rental history. The 12 month rental history must be verified through either a

management company or 12 months canceled checks. The other 2 trades must be monthly pays and

rate for 12 months. These 2 alt trades should be provided on an alternative credit report. *

NOTE

* Alt

trades can be requested at underwriter discretion.

0 X 30 permitted in last 24 months with explanations – Exceptions may be granted if your borrowers

have 620 or greater middle credit scores.

Bankruptcy/Foreclosure/Short Sales

Chapter 7 and 13 must be discharged for 3 years – Foreclosures must be completed 3 years ago.

Credit must be reestablished and no derogatory credit since BK or F.

Collections

Accounts cannot have been placed in collection status within the last 12-months – Exceptions may

be granted if your borrowers have 640 or greater middle credit scores. Large balances and/or credit

repossessions balances in most cases will be required to be paid off.

Judgments

Must be paid off for at least 12 months – Exceptions may be granted if your borrowers have 640 or

greater middle credit scores.

CURRENT RENTAL PAYMENT

MUST BE LISTED ON 1003 IF APPLICABLE

Scores>640 possibly waived by CNB underwriting

Scores>620 possibly waived by CNB underwriting with additional nontraditional credit trades

No Score Loans must have rent verification without exception

Non-traditional credit

Non-Traditional Credit May be required in the borrower(s) have limited trades and no derogatory

credit history. Alt trades must be a VOR (management company or cancelled checks, no private party

VOR ), electric, gas, phone, etc. 3 Trades with 24 month history.

Credit report

RMCR or Tri-Bureau merged

Homebuyer education

Case by case basis or No Score borrowers & First Time homebuyers

FUNDS FOR CLOSING

Closing costs

All closing costs may be financed, except discount points unless borrower is

below the RD low income limit, then discount points may be financed

Seller concessions

All closing costs and prepaids may be paid by seller concessions. Max 6%

Gifting

100% gifting acceptable from disinterested third party **Documentation

Required: Acceptable gift letter, donor’s ability to gift, Evidence of receipt &

deposit of gift, & updated bank statements or History printout to reflect balance

after gift. **Note** History printout must identify the borrower, the account

number, and must be stamped, signed and dated by the teller***

Cash contribution

No minimum cash contribution from borrowers

Earnest Money Deposit

Copy of cancelled check & Evidence of borrower’s own funds

PROPERTY REQUIREMENTS-FNMA 1004MC by FHA Approved Appraiser.

All USDA Appraisals are ordered on CNB National Lending, LLC’s website: http://www.cnbnationallending.com

Eligible areas

Property must be located in a RD eligible area

http://kentuckyusdaloan.wordpress.com/2011/09/02/kentucky-usda-mortgage/

Other Real Estate Owned

Occupancy/Size of Home

Primary residence only and Minimum Square footage 800

Property Type

Single family or RD eligible condo/PUD. 1 unit only.

Manufactured homes

No Manufactured Homes Allowed.

Swimming pools

In-ground swimming pools require an exception from USDA **Note** the

contributory value of the pool must be subtracted out of the appraised value of

the home*** (above ground permitted)

Thermal Certification

Thermal insulation certifications are no longer required!

Home Inspection

Adequacy Certification

USPAP Ethic’s Rule

Homes must be certified as meeting HUD handbook guidelines 4150.2 &

4905.1. This specific verbiage must be added to the appraisal on page 3 of 6

Page 3 is the same page as the cost approach section.

Appraiser’s must comply with the 2010/2011 USPAP Ethics Rule in the

Conduct Section requires that the appraiser, to make the following statement on

page 3 of 6 in the additional comments section above the cost approach section.

Appraiser’s must state the following ~~ Therefore, I am stating that I have not

performed an appraisal service with regard to the subject property in the three

years proceeding this assignment.

Termite inspection

All areas as required by RD &/OR appraisal or purchase contract.

Well/Septic inspections

If property has a well &/Or Septic this is 100% required – Septic inspection

may be completed by FHA roster appraiser. Appraiser to state that he/she has

located septic and it appears to be in working order, free of observable system

failure and it is an acceptable distance from the well & lot line and is in

compliance with HUD OR State code. Well water must be tested by state

certified lab.

Repairs-Must be completed

prior to loan closing as

required

NEW!

Escrow repairs now available. details for USDA Repair Escrows

CFR 226.2(a)(2). All products are subject to credit and property approval. Program terms and conditions are subject to change without notice.

Not all products are available in all states or for all dollar amounts. Other restrictions and limitations apply.

67 thoughts on “Guidelines

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