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(Interestingly, no sooner had I posted this than there was a change: 

SFH Origination News

From the National Office in Washington DC

05/12/2010

 Fiscal Year 2010 Appropriated Funds – Issuing Conditional Commitments once Appropriated Funds are Exhausted

The purpose of this notice is to recall and void the guidance that was released on May 11, 2010, regarding Fiscal Year 2010 Appropriated Funds – Issuing Conditional Commitments once appropriated funds are exhausted.   The guidance provided in the notice will be revised and released within the next 24 to 48 hours.  We apologize for any inconvenience this may cause, and reiterate that the guidance provided on May 11, 2010 is hereby void.

We appreciate your continued participation in the Single Family Housing Guaranteed Loan Program.  If there are questions regarding this notice please contact our office at 202-720-1452.)

This has not made it to the USDA website, but our underwriting deparment says they have been told by USDA they expect the change by Memorial Day and are processing USDA Rural Guaranteed Loans per new instructions. Any new submissions for a USDA Guaranteed Rural Home Loan must be manually underwritten and have a 3.5% guarantee fee instead of the 2% guarantee fee currently (until today) in place. The 3.5% will be financed so the total loan to value will be 103.5%.

The manual underwriting has to do with the software for the GUS system not accepting the new 103% LTV. This is good news, in that an increase in funding fee is much more favorable than the elimination, or at least the suspension, of the program completely. Not all lenders are processing the USDA loan currently, some are waiting for the final bill.

USDA Guaranteed Rural Home Loans are 100% financing (the 3.5% is financed) for homes located outside of the urban growth boundaries of the major metropolitan areas in Oregon. For instance, homes in Cottage Grove, Creswell, Veneta, Junction City, Oakridge, Westfir, Walton are some of the areas in Lane County that qualify.

There are income limits for the Guaranteed Home loan. You can find them here. However, the income limits are quite liberal and many people can qualify for the loan and not have to come up with the down payment.

A word of warning, USDA does not make farm loans. They are used mainly for small towns and cities and do not work well with large acreages and outbuildings. Don’t expect to purchase a 20 acre parcel with a horse barn using USDA funds, it won’t happen.

Contact Me

If you have been thinking about buying a home using the USDA Guarantee program in Lane County, I am standing by ready to help you with the process. You can always call or e-mail to find out what is happening today with the program or check on the Get Started tab above. I am at Alpine Mortgage Planning, 1200 Executive Pkwy., Ste. 100, Eugene OR 97401. Call me today at 541-342-7576/541-221-3455 or send me an e-mail to discuss options.