Many mortgage originators are not aware that a government lending program for rural properties can also be used to finance homes in not-so-rural areas.
Think a home located in the suburbs and above-average income levels equal disqualification for a U.S. Department of Agriculture home loan? Think Again.
Both loan originators and prospective mortgage borrowers commonly misconstrue USDA mortgage eligibility, which means missed opportunities for lenders and consumers alike.
That is according to Marla Grassgreen, director and rural housing program manager at WCS Lending.
“One of the common misunderstandings about USDA loans is that they are limited to very low priced homes in small rural areas,” Grassgreen said in a May 15 press release. “In reality, our average loan amount is $140,000, and we are making loans all across the country, including suburban towns that are anything but rural.
“In fact, in some states, the vast majority of the state is eligible for USDA loans.”
Under its residential mortgage program, the USDA guarantees loans for up to 90 percent of the total loan value, the Boca Raton, Fla., firm said. Property location does determine income thresholds, but maximum earning can go up to $75,000 for single people and over $98,000 for households with five or more people.
As well, borrowers who qualify for USDA mortgages can finance up to 102 percent of the appraised home value regardless of it exceeding the purchase price.
The USDA earmarked $24 billion for mortgages in 2013, according to WCS. The top five USDA loan-producing states , in descending order, are North Carolina, Texas, California, Florida Michigan.