USDA LOAN - HOME BUYER CHECKLIST

USDA INCOME AND GEOGRAPHIC ELIGIBILITY GUIDELINES - GENERAL

	Must be in an eligible USDA Rural Development Location. To determine if the property is in an eligible USDA area follow these instructions:
	Go to the USDA Rural Development Website On the left hand side tool bar, under "Property Eligibility", click "Single Family Housing" Click "Accept" Enter property address to determine if a specific house is located in an USDA eligible area
	County specific income guidelines. Reference the USDA website for adjusted household income limits

BORROWER SPECIFIC

	Borrower Type Allowed
	U.S. citizens Permanent resident aliens First time home buyers allowed Non-occupant co-borrowers NOT allowed
	Loan Amount – Minimum & Maximum
	Minimum loan amount: $80,000. (Note, this is an internal lender guideline. The USDA Loan program has no minimum loan amount guideline. If you are purchasing a house with a price less than $80,000 contact other lenders to determine if they will service your mortgage requirements.) Maximum loan amount: No limit. The maximum loan amount that a borrower can qualify for will be determined by the borrowers debt to income ratio and Guaranteed Underwriting System’s findings
	Minimum Credit Score
	Middle Credit Score - 640 for each applicant for GUS automated underwriting approval Middle Credit Score - 580 for each applicant for manual underwriting approval and a documentable rent history within the last 12 months.
	Multiple Property Ownership
	USDA Rural Development often won't allow applicants to own other properties Exceptions include when the other property owned is: Not owned in the local commuting area as the new property; Not structurally sound and/or functionally adequate Manufactured home not on permanent foundation
	Qualifying Ratios
	29/41% debt-to-income (DTI) - Target 34/46% debt-to-income (DTI) - With compensating factors such as: 680 or higher credit score No or low "payment shock" - less than a 100% increase in proposed mortgage payment Vs. current rental housing expenses Fiscally sound use of credit Ability to accumulate savings Stable employment history with 2 or more years in current position or continuous employment history with no job gaps Cash reserves available for use after settlement Career advancement as indicated by job training or additional education in the applicants profession Trailing spouse income - as a result of a job transfer, the house is being purchased, prior to the secondary wage-earner obtaining employment. If the secondary wage-earner has an established history of employment and has a reasonable chance to obtain new employment in the area Low total debt load

OBTAIN A LOAN PRE-QUALIFICATION LETTER

At Bridgeview Bank Mortgage our focus is on getting USDA Loans approved. This means Bridgeview Bank Loan Officers will perform a high level of due diligence when pre-qualifying a borrower for a mortgage, which includes:

	Obtaining a credit report from all three credit bureaus
	Verifying income documents, including W-2’s for the last two years, recent paystubs, and tax returns for the last two years if the borrower is self employed
	Verifying asset documents for the last two months
	Preliminary approval is run through USDA Guaranteed Underwriting System or GUS
Prior to issuing a loan pre-qualification letter, at a minimum the Loan Officer should verify the following:
	Full tri-merge credit report
	Income verification which includes paystubs and the last two years of W-2 statements
	For self-employed borrowers full review of previous two years of tax returns
	Application processed through USDA Guaranteed Underwriting System (GUS).

If your Loan Officer is not processing your loan request through GUS, find yourself a new Loan Officer. At Bridgeview Bank all loan pre-qualification letters are processed through GUS

To get started on your USDA Loan, you can submit an online loan application or call (866) 552-5912. If you meet Bridgeview Bank investor guidelines, you will be emailed a loan pre-qualification letter and an analysis of your monthly mortgage payment and estimated closing costs.

PROPERTY SPECIFIC

Eligible Properties Existing attached & detached single family residences New construction with permanent financing only PUD's (i.e. Townhomes) Condo-units. HUD, VA, FNMA or FHLMC approved project

Ineligible Properties Co-ops Mixed-use Condotels Manufactured homes Log cabin homes Single Family Homes where the land value exceeds 30% of the appraised value AND can be sub divided. House not in move-in condition (i.e. no “fixer-uppers”) No income producing properties Agriculture structures Outbuildings that sync up with home buyers skill set (i.e. large garage with car lift being sold to an auto mechanic) Ability to rent portion of the house Separate living areas with dedicated entrances Kitchenettes Duplex If land value based on the appraisal report exceed 30% of the appraised value: Land can't be subdivided Appraiser must indicate lot size is normal for the area If the property is on well and septic 75 feet between well head and septic tank (can be 50 feet if approved by County) 100 feet between well head and septic drain field Well head must be at least 10 feet from adjoining property line and roadway

STRUCTURING THE TRANSACTION

	Down payment Requirement No down payment is required If borrower has adequate liquid assets (i.e. 20% of the property purchase price) to obtain conventional financing the borrower may be ineligible for the USDA Rural Development Loan
	Seller Contribution No down payment is required

	Home inspection are recommended but not required by the loan program
	Appraisal report – approximate cost $495
	Pest inspection (if stipulated in the sales contract) – approximate cost $75 to $100
	Water test (if the property is on well water) – approximate cost $150 to $300
	Septic certification (required if the appraiser is unable to determine the distance between the well head and septic tank/drain field) – approximate cost $100