Effective January 20th, 2009 the USDA Guaranteed Rural Housing Program is changing its structure for income limits. The result of this is to essentially increase household income caps dramatically! Now even a single person making under $70,750 will qualify for this program (previous limits were as low as $49,550). A number of households who were just over the income caps will now qualify for this incredible 100% financing, and be able to enjoy a low fixed interest rate and no mortgage insurance premiums. Click here for the new income limits in Southwest Florida: Link

Most posts to this forum lately have been on the topic of interest rates, which makes sense because they have been very much in the news, recently touching upon 30-year lows in response to unprecedented moves taken by the Federal Reserve. For a brief period rates on many loan products actually broke into to 4’s, but that trend has lately reversed. Today’s published USDA Guaranteed rates are actually back at 5.5% – 5.75% fixed. Conforming loan rates for well-qualified borrowers are also back into the low-to-mid 5’s. These are not bad rates at all (!), but borrowers who were expecting 4.5% will have to temper expectations.

In response to yesterday’s action by the Fed, this morning’s published fixed interest rate for USDA Guaranteed 100% loans fell to a crowd-pleasing 5.00%. This, coupled with the recent record decline in local housing prices, presents quite possibly the best buying opportunity for first-time home buyers in our lifetime. By all means, call Home Team Mortgage for more information: (239) 898-4111.

This morning when USDA fixed rates were published, they had dropped from 6.5% to 5.5%. There is no way of knowing whether this is the beginning of a long-term trend or a short-term reaction to actions taken by the Fed. Take advantage and lock in now! 239-898-4111.

On October 10th, Congress appropriated a unprecedented $7 billion in funds to insure new Guaranteed Rural Housing loans originated between October 2008 and September 2009. Geographic eligibility standards will not be redrawn until after the 2010 US Census, so at present these 100% loans are still available locally in all of Collier County, most of Lehigh Acres, and the San Carlos Park neighborhood of Fort Myers. Contact Home Team Mortgage at 239-898-4111 for more information or to be prequalified.

There is a lot of confusion right now regarding these government loans, so here is a rundown on recent and imminent developments:

Regarding FHA, the most important recent change is the prohibition of seller-financed down payment assistance programs such as Nehemiah, Preferred Program, etc. Effective October 1st, 2008, these programs are effectively illegal due to passage of the Housing and Economic Recovery Act of 2008. While there is currently a bill in the House to reverse this decision and render the programs legal once more, there is no reasonable guess as to when (or whether) such legislation might be passed. Most lenders have chosen not to wait for October and have already stopped honoring these programs. As a result, any borrowers purchasing a home using the FHA loan program must put down 3% of their own funds (or gift funds from their family). Beginning January 1, 2009, that required down payment increases to 3.5%. While sellers can still contribute up to 6% of a contract price to pay the borrower’s closing costs and prepaid items, but they can’t help with this required down payment. Underwriting guidelines are also changing on a regular basis—generally becoming more restrictive. While the FHA loan program itself has no particular credit score requirements, individual lenders have all imposed their own more conservative “overlays” to the guidelines. Generally, each borrower on an FHA loan must now have a minimum middle credit score of 580.

The USDA Guaranteed program has undergone some minor guideline tightening as well. Again, a 580 middle credit score is going to be required for all borrowers; this is not a program guideline, but is a requirement of each individual lender offering the program. There is also some confusion over the end of the fiscal year for the USDA, which occurs at the end of September 2008. The only impact this might have is a delay of a few days while Congress allocates funding for the 2008-2009 fiscal year. More likely, there will be noticible impact to any customer. One prominent lender does not even wait for Congress to set the annual budget, but just keeps funding the loans anyway. Unlike FHA, the USDA Guaranteed loan is still true 100% financing, with no required down payment. There is also no monthly mortgage insurance requirement with the USDA program, giving it the lowest monthly payment of any loan product.

For additional program details, click on the “Financing” tab above.