USDA Funding Update – Fiscal 2011

Date: October 1, 2010
Source Document
Questions or Comments Regarding This Information?

The U.S. Department of Agriculture Rural Development program will provide Conditional Commitment for the Single Family Housing Loan Program for purchase transactions in fiscal year 2011, which started October 1, 2010. The Guarantee Fee will be 3.50% of the loan amount.

What does Conditional Commitment mean? For lenders Conditional Commitment means:

  • USDA will accept applications (just for purchase transactions at this time), underwrite, approve and issue a "Conditional Commitment."
  • Lenders will continue to fund loans allowing for settlements to occur.
  • Once funds become available USDA will fund the loans and lenders will receive a Loan Note Guarantee.
  • Lenders stand the risk of default prior to the Loan Note Guarantee being issued.
For homebuyers wanting to use the USDA loan program this is a non-issue as lenders have been through this process with USDA several times over the last few years. Lenders know that USDA will be fully funded shortly and are willing to accept some risk during this interim period in which USDA ramps up for the new Federal Government fiscal year.

If you are considering financing an upcoming home purchase using a USDA loan and want to learn more about your financing options through the USDA Rural Development Loan Program complete the contact form or call (866) 747-2882 to speak to your local Maryland loan professional.

USDA Funding Is Back

Date: September 8, 2010
Questions or Comments Regarding This Information?

Yesterday – September 7, 2010 – USDA Rural Development announced that beginning September 8, 2010 it will once again start issuing Conditional Commitments without the "subject to funding" language. Going forward Conditional Commitments will be issued through the end of the Federal Government fiscal year, which is September 30, 2010. In addition, USDA announced that its automated approval engine, GUS or Government Underwriting System, has been updated to reflect previously announced changes to the USDA Commitment Fee.

Prior to new loans being approved for Conditional Commitment, USDA will need to clear the backlog of loans that have Conditional Commitments with the "subject to the availability of funds" statement that lenders have been funding since May 26, 2010.

This is fantastic news for lenders that have continued to close and fund USDA Rural Development Loans since May 26, 2010 as these loans required the lender to assume a level of risk pertaining to changes to the borrower's financial condition and default potential of the borrower. To combat this additional exposure to risk, many Underwriters have been approving loans much more conservatively since May 26.

Now that Underwriters once again have access to GUS, homebuyers using the USDA loan program will find that:

  • Credit and debt ratio waivers will once more become available
  • Borderline applicants will more readily obtain credit approval
  • Underwriting turn times will improve as Underwriters are no longer required to manually underwrite each file
If you are considering financing an upcoming home purchase using a USDA loan and want to learn more about your financing options through the USDA Rural Development Loan Program complete the contact form or call (866) 747-2882 to speak to your local Maryland loan professional.



USDA Announces Increased Income Limits

Date: June 2, 2010
Source Document
Questions or Comments Regarding This Information?

The income limits for the USDA Guaranteed Rural Housing (GRP) Program have increased effective June 2, 2010. While the increase in Maryland is less than $1,000, considering that family incomes have stagnated over the last year, any increase is helpful in qualifying more homebuyers for this loan program.

Based on the increase new maximum income limits are as follows:

CountyIncome 1-4Income 5-8
Allegany$89,150$117,700
Anne Arundel$92,600$122,250
Baltimore$92,600$122,250
Calvert$92,600$122,250
Caroline$89,150$117,700
Carroll$92,600$122,250
Cecil$90,050$118,850
Charles$92,600$122,250
Dorchester$89,150$117,700
Frederick$92,600$122,250
Garrett$89,150$117,700
Harford$92,600$122,250
Howard$92,600$122,250
Kent$89,150$117,700
Montgomery$92,600$122,250
Prince Georges$92,600$122,250
Queen Anne's$92,600$122,250
Somerset$89,150$117,700
St Mary's$92,600$122,250
Talbot$89,150$117,700
Washington$89,150$117,700
Wicomico$89,150$117,700
Worcester$89,150$117,700

Remember that USDA does allow for the total household income to be higher than these income limits provided that certain adjustments or reduction to income can be made including:

  • Documentable childcare expenses for children age 12 and under
  • $480 per child for anyone under 18
  • $480 for any student other then one of the applicants
  • $400 for each disabled or handicapped individual who is not one of the applicants
  • Medical expenses for any elderly family member
These adjustments can be used to lower the gross household income to an amount that is less than the above mentioned maximum gross income. If you are considering financing an upcoming home purchase using a USDA loan and need assistance in calculating your adjusted gross income using USDA Rural Development Loan Income Guidelines complete the contact form or call (866) 747-2882 to speak to your local Maryland loan professional.