What is a USDA mortgage? Basically it is a no-down/low down -payment program designed for rural areas from the United States Department of Agriculture. This is great news to a homebuyer, due to the fact you can purchase with very little out of your pocket. The interesting fact is that Naples and all property in Collier County qualifies as being eligible for a USDA rural loan. Drive down US-41 and you wouldn’t think it was rural, but according to the government, it is! Here’s where you can check eligibility for the property you’re interested in purchasing: //eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do.
Rural Housing Direct Loans are loans that are directly funded by the Government. You may obtain 100% financing to purchase an existing home, purchase land and build a home, or purchase newly constructed homes located in rural areas. The mortgage payments are based on the household’s adjusted income and they are designed for lower income borrowers. These loans are referred to as Section 502 Direct Loans.
Here’s the problem – these loans are on a first come, first serve basis, so when the money’s gone – it’s gone! And that’s the issue; the government is running out of cash to fund these loans. That is putting a lot of sales at risk throughout Florida where the borrower may not be able to get this type of loan anymore. Just last week, the USDA said that funding authority for the USDA Rural home loans “would likely be exhausted by the end of April 2010.”
Unfortunately, the newly appropriated funds for this loan program are not available until October 2010. There is good news though. The National Association of Realtors has sent letters to Congress- and the National Association of Builders has been urging Congress – to immediately extend the program funding. If this money dries up, it could negatively affect the housing market if all potential buyers can no longer be qualified to purchase.
Another problem is that Congress is in recess until April 12, so it won’t be until at least then that any additional funds would become available – if at all. If you are a homebuyer hoping the funds become available, don’t count on it! It would be great for the housing market if they did, since there are so many qualified homebuyers banking on getting a USDA loan. Be proactive and seek other alternative types of funding to purchase your home. Especially if you are trying to qualify by the April 30 deadline for the tax credit of up to $8000 for first time buyers and $6500 for move-up buyers. I wouldn’t plan on the government to bail you out. You may get lucky, but consider it just that!
A good resource for questions is to call the USDA’s Single Family Housing Guaranteed Loan Division at (202) 720-1452.