USDA Rural Housing loans are about the only option for 100% financing, but this year the program was so popular that the government agency ran out of funding quite early in the year.  But, a bill has passed Congress and will be signed soon by the president that authorizes more funding.

The details appeared in on the WSJ blog, and my friend, Sue, who is a loan officer in Florida was quoted.

The Funding Fee will rise from 2% to 3.5%. That is the fee normally rolled into the loan that insures the loan, much like PMI insures a conventional high Loan-to-Value mortgage.  Otherwise, everything else remains the same on these deals – the property being purchases must be considered ‘rural’, and the household income cannot exceed 115% of the county median income.

Where income is concerned, just call me if you are interested in applying for a USDA loan in Georgia, since it is easier to look the medians and exceptions than to calculate it.

So, good news for homeowners buying outside the metro areas – USDA loans are back as a financing option.

Related posts:

1. Georgia USDA Update
2. Georgia USDA Rural Housing Loans
3. Update on Georgia USDA Rural Housing Funds

Here is the note that was sent along:

Congress came back to town on Monday, and since then I am pleased to report we have had real movement fixing the 502 rural guarantee program funding problem in response to our letters and meetings. Key members of Congress have committed to us their intent to resolve the issue on a permanent basis with a modest increase in the fee structure. Based on feedback from our members who use the program, we have communicated that this is an adequate solution.

Shortly, two bills will be introduced, one Dem and one GOP which will take slightly different approaches but will both include a fee increase that would go back into the program to make it self sufficient. There is a commitment on all sides to get this done promptly. If you have any comments or concerns, let me know.

So, even though funding for Georgia USDA rural housing loans is nearly used up; we may not see much of a gap in funding for this optimal financing.  Rural Housing loans are, after all, only one of two 100% financing loans still existing.

The other being VA loans, of course.

Related posts:

1. Update on Georgia USDA Rural Housing Funds
2. USDA Loans Coming Back to Georgia
3. USDA Funding Set to Expire

So, if you are in the market for a home that qualifies for a Georgia Rural Housing loan, then you need to act quickly.  We are still accepting those loans, so long as the contract is scheduled to close before the end of April, 2010.

After that, we will all have to wait to see in Congress allocates more funding to the Rural Housing program.  And who knows when that might be.

Here is the update that I have as of today:

Related posts:

1. Georgia USDA Update
2. Georgia USDA Rural Housing Loans
3. USDA Funding Set to Expire

Lenders just received this notice today:

This message is to notify you that program funding for the Single Family Housing Guaranteed Loan Program will likely be exhausted by the end of April, 2010.

Once funding is exhausted, the Agency will not issue Conditional Commitments “subject to receipt of appropriated funds.”  This is because it is not certain when additional funding will be available.

Limited funding may become available for disaster areas declared in 2008, or in disaster areas declared for Hurricanes Katrina and Rita.  Limited funding may also become available as prior Agency commitments are de-obligated, however, such funding will be very limited.

We apologize for any inconvenience this may cause you.

So, if you are in the market for a home that qualifies for rural housing, then now’s the time

Related posts:

1. Update on Georgia USDA Rural Housing Funds
2. Georgia USDA Update
3. USDA Loans Coming Back to Georgia

You see, these loans have two distinct advantages that no other loan product can compare with:

• 100% Financing for the home.  That’s right, no down payment is needed.  So, for a Georgia first time home buyer who has amassed a small savings – a few thousand dollars – may be better served to count that as their reserve funds, and finance 100% of the purchase price, at extremely low interest rates.
• No Monthly MI Payments: Right.  That dreaded PMI that protects the lender against default, but the buyer has to pay for, is not there on a USDA loan.  Too good to be true? You got me.  There is what would correspond to MI, and it is equal to 2% of the loan amount, but much like an FHA mortgage, that 2% is added to the loan amount and financed.  So, on a monthly payment basis, it is nearly painless.

Related posts:

1. USDA Rural Housing Loans
2. Update on Georgia USDA Rural Housing Funds
3. USDA Loans Coming Back to Georgia

USDA Funds Released – $10 Billion (yes, that’s billion with a B) has been allocated. According the USDA, about 25% have already been used to fund “purchase transactions only” that have been on HOLD since January 9, 2009. When the “dust” settles, money will be released for refi’s.. Not every community qualifies—but if it does, it’s the best thing since sliced bread!.

I agree, it is the best thing since sliced bread, since a USDA loan is 100% financing, at market rates, and has NO monthly Mortgage Insurance (MI).  I just closed one for a young couple who purchased a home in Winder, GA.  They came to closing, and got a check back for nearly all their earnest money.  Nice.

Related posts:

1. Georgia USDA Rural Housing Loans
2. Update on Georgia USDA Rural Housing Funds
3. USDA Loans Coming Back to Georgia