Indiana USDA Rural Development Home Loan Information

Indiana Home Buyers Looking for True 100 Percent Financing Should Consider using the USDA Rural Development Home Loan Program

One of the best kept Indiana mortgage secrets to true 100 percent home financing in Indiana is the USDA Rural Development home loan program.  This program is used to help moderate income Indiana home buyers purchase homes in rural housing areas.

If your income falls within 115% of the median income for your area, you qualify for this program - as long as you can prove that you are able to make the mortgage payments, including taxes and insurance.  There is no minimum credit score requirement for this mortgage program; however, you must be able to show “credit worthiness,” which means that you can’t have late payments or missed payments, collections, etc. on your credit report.

What Type of Home is Eligible for the USDA Rural Development Program?

 You may be surprised to learn that the USDA Rural Development program covers homes that are actually pretty darned nice!

Housing must be modest in size, design, and cost.   Homes purchased, constructed, or rehabilitated have to meet up with the voluntary national model building code adopted by the state of Indiana, as well as HCFP thermal and site standards.

Manufactured homes are eligible, but new manufactured housing must be permanently installed and meet the HUD Manufactured Housing Construction and Safety Standards and HCFP thermal and site standards.

No Down Payment Required.  This is a true 100 Percent Financing Mortgage Solution!

 As long as you can prove credit worthiness and the ability to pay your mortgage, you should qualify!  Overall, your repayment feasibility, using ratios of repayment (gross) income to PITI and to total family debt will be determined.

 Highlights of the Indiana USDA Rural Development Home Loan Program

· NO Down Payment Required - 102% Financing
· No cash reserves required
· No First Time Homebuyer Requirement
· New and existing homes OK
· Fully amortized 30-year fixed rate loan
· No minimum credit score required…common sense underwriting
· 100% gifted closing cost or down payment assistance is permitted
· Non-traditional credit may substitute for lack of traditional credit history
· No Mortgage Insurance
· No seller contribution limit
· No Prepayment Penalty
· Loan amount can include closing costs and pre-paids up to 102% of appraised value
· No stated maximum loan amount; maximum loan based on repayment ability
· No minimum cash contribution required from borrower
· No limitation on source of funds for closing costs. No seasoning requirement
· No derogatory credit explanations required when credit score is 620 or above
· Rent is not verified with credit score of 620 or more
· Qualifying ratios of 29%/41%…29% PITI to Income and 41% Total Debt to Income, however standard ratios may be exceeded with documented compensating factors
· New “Manufactured Homes” Acceptable - Setup & Installation on owner-occupied land (No leases or lifetime leases allowed - you MUST own the land, too!)
· Maximum Income Limits are good for town homes, modular homes and condos

Determining if property is in a Rural Development designated rural area:

 Indiana is actually filled with areas that qualify as eligible for the USDA Rural Development program.  In fact, all counties except Marion Counties are eligible.

 Is Your Chosen Home Eligible for the USDA Rural Development Program?

 To find out if your chosen home is eligible for the Indiana USDA Rural Development mortgage program, visit http://eligibility.sc.egov.usda.gov/ and type in the address information.  You may also click on the map presented.

Click on “property eligibility”. Chose “housing programs”. If you cannot locate or do not know the address, simply click on the county (Locate the map of Indiana or select from the choices available on the right hand side of the page).

Use this map of Boone County, Indiana as an initial visual… it will blow your mind! (Note: The dark orange areas are NOT eligible, the lighter peach areas are good to go!)

Note: The following Indiana counties contain some non-rural areas

Allen, Bartholomew, Boone, Clark, Delaware, Elkhart, Floyd, Grant, Hamilton, Hancock, Hendricks, Howard, Johnson, Lake, LaPorte, Madison, Marion, Monroe, Porter, St. Joseph, Shelby, Tippecanoe, Vanderburgh, Vigo, Wayne.

 Determining Your Income Eligibility for USDA Rural Development Financing

 Income limits are provided below.  Don’t be afraid if your initial income is over the limit.  The USDA Rural Development program allows you to deduct from your income expenses like childcare expenses for children age 12 or younger and paid to someone outside the family. You also can deduct one $480 annual deduction for anyone under 18 as well as for a student living in the home (say, a community college student who commutes) - as long as the student will not be on the mortgage.

Example: Henry County 4-person family (2 adults, 2 children) has a gross income of $80,310. Child care for the two children age 12 or less is $10,000 annually. Is the threshold income at or below the limit? YES. $80,310 less $10,000 child care less $480 for each child = $69,350. Even though the initial income is over the limit the adjusted income qualifies

 Some areas in Indiana have a slightly higher income eligibility amount.