USDA Advance Copy Notice HB-1-3555 Chapter 11
USDA has announced that Chapter 11 of the HB-1-3555 will be updated and an advanced copy has been provided. Changes will become effective after USDA issues a Special Procedure Notice.
- Clarification was added that revolving accounts with no outstanding balance are not required to be closed.
- USDA eliminated guidelines provided that a retained property that has been rented for 24 months or longer may be omitted from the DTI, and
- Added guidance that the income received from rents may only be included in the repayment calculation if the property has been rented for 24 mo. or more.
- Guidelines were added that monthly payment for borrowers in debt management plans must be included in the DTI.
- The calculation guidelines for Non-Fixed Student Loan Payments were updated removing the requirement for the greater of calculation to be used and added guidance for when the payment amount is zero.
- Additional guidance was added that compensating factors supporting Debt Ratio Waivers for manually underwritten loans must be documented.
- Clarification was added that federal, state and local taxes don’t need to be included in the DTI unless there is a payment plan in place.
Refer to the Advance Copy Notice HB-1-3555 Chapter 11 and Chapter 11: Ratio Analysis
Here are the highlights of USDA Mortgages
. Down Payment: 0% down payment
. Credit Score: Minimum none–but lenders create overlays..typically 640 to get a GUS Automated approval
. Lower monthly mortgage insurance costs (PMI) versus FHA
. There is NO maximum set loan amount limit with USDA Rural Housing.
. No large savings are needed to qualify for USDA loans.
The debt to income, or DTI is limited to 45% – lower than most other loan programs.
The location of the home determines if it will be a USDA loan.
. The home can be a regular sale, short sale, foreclosure home or bank owned home single family, townhome or approved condo.
Mobile/Manufactured homes and “build on your own land” not available.
. Applies for First-time home buyers, or move-up buyers.
No special first-time buyer’s class, down payment assistance, or bond money is needed.
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