The USDA home loan is a great financing option, and is available in many areas of Oregon and Washington. These loans are also referred to as “Rural Development” loans.

In order to qualify for a USDA home loan:

“applicants for loans may have an income of up to 115% of the median income for the area. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance. In addition, applicants must have reasonable credit histories”.

What that means is if you make less than about 80k per year (depending on your county) and live in a “rural”, area you could take advantage of this niche loan product.

Some of the benefits of a USDA home loan include zero down payment and a low monthly mortgage insurance premium.

What does “rural” mean?  Check the map. Basically any area that had less than 25,000 people as counted in a census in the mid 1980s! There are many areas that are eligible for the USDA rural development home loan program surrounding my home area of Portland, OR (Clackamas County, Washington County, Marion County) as well as Vancouver, WA (and greater Clark County). That may come as a surprise, since many of these areas of Oregon and Washington seem fairly “metropolitan”.

They occasionally adjust the map but you get the idea.

Since this has been such a popular program, the funds Congress appropriates for it frequently run dry.

On April 23rd, 2010 HR 5017 passed the House Financial Services Committee, which is the first step to gaining uninterrupted funding for USDA Home Loans.

If it ain’t broke…

did you hear the one about USDA?

When the government is involved, there is always changes and “improvement”.  Some of the rumors, and that is all that they are at this point, are an increase in the funding fee from 2% to 4% and possibly adding a monthly mortgage insurance premium.  Depending on the rate for the mortgage insurance that could add a hundred dollars or more per month. As far as the funding fee, it is rolled into the loan.  It will remain a “not out of pocket” expense, just more principal you would have to pay back over the life of the loan.  The bottom line is that Congress messing with something is rarely a good thing, but the USDA home loan is still a great option for people looking to buy a home with no money down.

Currently we are waiting for Congress to finalize the details and pass a funding package to keep this program afloat. When we get the final word on the updated terms and dates we will let you know.

UPDATE

As I detail in this post, as of October 1st 2011, USDA home loans will change from having only an upfront fee, to a model that more closely resembles the FHA home loan. The upfront USDA fee will go from 3.5% down to 2%, and there will be the introduction of a .3% annual fee. To see how that breaks down, read this.

If you have any questions about the USDA home loan program, or any other mortgage options you may have heard about, feel free to call me at 503.799.4112, email me at jason@mypmb.us, or fill out the following easy, breezy contact form. I promise to not spam you :-)

And if you live in the area surrounding Portland, Oregon and Vancouver, Washington, well then…

and talk USDA Home Loans!