Borrow More Pay Less

Some Features of USDA Zero Down Financing Established in 1991 For What Purpose? Populate _______________ Enable ________________ Own Homes Gov’t Guaranteed – What does that mean? Unlimited Guarantee Funds Available Guarantee Fee is 3.5% = Financed With Loan Upfront

USDA Zero Down Financing some Basic Requirements Must Not Presently Own “Adequate Housing” The regulation, 1980-D, 1980.346, reads "The applicant must : (a) Be a person who does not own a dwelling in the local commuting area or owns a dwelling which is not structurally sound, functionally adequate.” Example #1 ______________________________________________ Example# 2 ______________________________________________

Borrower Must Have an (Adjusted Gross) Income that does not exceed the Income Limit established for the Area

Borrower Must Have an “Acceptable Credit History” Credit Score Requirements FICO Score Requirement : _________________ No Credit/No Score? Then _______________ Collections & Late Pmts: ___________________ Past Bankruptcies & Foreclosures/Short sales must be ____ yrs old

Repayment Ability that falls within acceptable guidelines 29%/41% debt ratios – What do these numbers mean??   Can I be approved with “Ratios” higher than that? Yes with Compensating Factors : _____ FICO Score Time on Job Pattern of Savings No Payment Shock (Going From Rent to Purchase) Verifiable Rent History

The Home being purchased must be Owner Occupied   ______ No Investments/Rentals/Investors/Vacation Homes

The Home Must be a Townhome, Condo or Single Family Home (Manufactured allowed if new/never occupied)   Approved Condos are listed https://entp.hud.gov/idapp/html/condlook.cfm

Home must Be in a Geographically Eligible Area (singled out for being low density) http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?NavKey=home@1   How do we determine if a home is eligible ? Eligibility Areas were last determined in Year _______ Every State has Eligible areas Some Counties are ENTIRELY eligible- Some Counties have both ELIGIBLE & INELIGIBLE areas

Borrower must have a __ year Job History    (Self Employed Borrowers = minimum 2 yrs Tax returns, qualified on Net Profit of Business)

Home Must Not Be used for Income-producing purposes (No duplexes, triplexes, farms, commercial uses etc)

Borrower(s) Must Make Enough to Qualify but not make too much Income of everyone in the household is included towards Income Limits Income Limits Are Set For MSA’s/Counties http://www.rurdev.usda.gov/HSF-Guar_Income_Limits.html Closer Look at Income Limits:

“What If I Earn Too Much?” – There’s Allowances For Minor Children, Childcare expenses, F/T Students Living At Home, Disabled persons etc. – (**Ask For Details**) Income Eligibility Calculator at http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do Closer Look at Income Limits:

 Sally Smith , Engineer , Murrieta, CA Gross Income $78,000 / yr 3 children aged 3, 7, 14 yrs = Household of 4 persons Riverside County income limit = $76,600 /yr for 4 person household.(as of 2011) Income Limit Example Calculation #1

…BUT!! She pays $240/mo childcare expense for 2 youngest kids Deduct $2,880/ yr from her Gross Income Adjusted Gross Income = $75,120 Sally is ELIGIBLE AND BELOW THE INCOME LIMIT! Income Limit Example Calculation #1

Income Limit Example Calculation #2  James Gonzalez is a Banker who lives in Sacramento, CA and makes $65,000 / yr His wife Margaret works as a Realtor and averaged $24,500 the past 2 yrs This is a Household of 2 persons Their Combined Gross income is $ 84,500 The Sacramento Area income limit is $81,650 for a 1-4 person household. (as of 2011) James & Margaret are NOT Eligible for the Program!

Special Features of USDA Zero Down Loans Borrow 100% of the Purchase Price, Zero Down! No Monthly Mortgage Insurance (This changes Oct 2011, Will still be cheaper than FHA Mortgage Insurance) No Cash Reserves Needed! No Minimum Cash Input from Buyer– Can Close with $0! Seller Can Pay All Closing Costs- No Limits

Special Features of USDA Zero Down Loans Borrow More Than Purchase Price if needed- How ?? Repairs Can be financed up to $10,000 ! No 1st Time Homebuyer requirement! No Loan Amount or Sales Price Limit ! 2nd job with only 1 yr history = acceptable! No “Non-Occupying” Co-Signers Allowed

USDA Zero Down Loan Process  APPLY WITH LENDER (See > List of Documents To Gather) GET APPROVED BY LENDER UNDERWRITER IDENTIFY & GO INTO CONTRACT ON AN ELIGIBLE HOME LENDER ORDERS APPRAISAL /APPRAISAL COMPLETED FINAL PACKAGE IS SUBMITTED TO USDA FOR ‘CONDITIONAL COMMITMENT’  CLOSING DOCUMENTS SIGNED BY BUYER FUNDING/CLOSING –TIME FOR THE KEYS!

 What Information To Gather For Loan Application 2 yrs W2’s & tax returns Recent paycheck stubs (2) Last 2 mos Bank Stmts-checking & savings Landlord contact info Retirement Account Stmt(s) Brief Explanation For Any Past Credit problems/Lates

 What Information To Gather For Loan Application BK Discharge Letter Divorce decree Child Support Order Prepare Answers to following How many dependents will live in the home? How much do you pay for childcare expenses Will there be any F/T students Above 18yrs living at home? Will there be any disabled persons living with you?

Borrow More Pay Less USDA Home Loans www.TheZeroDownLoan.com