Rural Development-An Answer to the Sub-Prime Collapse
November 14, 2007 – 9:26 am
The collapse of the sub-prime market left a lot of people in the lurch halfway through their loans. Loan officers went scrambling for options while borrowers lost precious time and money waiting to find out if they’d be able to get the house they wanted. Lenders went out of business and everyone who was left stopped offering loans to borrowers with problems. The USDA has an option that should be considered as an answer to this problem. It’s called the Rural Development loan and is geared specifically towards borrowers looking into rural areas. There are two major eligibility requirements and both are fairly simple to meet. They are income and property.
Income eligibility totals the base salary for all working occupants over the age of 18. This base income is then adjusted down $480 for each child, the cost of childcare for all children under the age of 13, and $400 for all household members over the age of 61. Each county in each state has its own requirements for acceptable income so we’ll look at Collin County, Texas where the maximum income is $82,600.
Number of occupants = 5
Number of residents under 18 = 2
Base Salary of Applicant = $2,600/month
Base Salary of 2nd adult = $1,700/month
Base Salary of 3rd adult = $650/month
Total Base Salary = $59,400/year
Minus $960 for two children = $58,440
Eligible for Guaranteed Rural Housing Loan Program
Your income eligibility can be found by going to the USDA website.
Property eligibility is based on population. Targeted communities have 10,000 or less people; though exceptions can be made for some towns and cities with a population between 10,000 and 25,000. Maps showing eligible areas can be found at the USDA website.
Though credit is not a basic deciding factor in Rural Development loans, it is still taken into consideration, as with any other loan program. If your credit score is low, the reasons for your score will be taken into consideration. All credit can be approved as long as you can show that the poor credit was temporary in nature, beyond your control, that the reason for the adverse credit has been removed, and/or that it is due to refusal to pay for defective goods. The lender will have to submit the appropriate documentation to receive waivers for low credit scores.
The Rural Development loan won’t work for everyone, but we have to know our options. As the mortgage industry changes, we have to learn to adapt to what’s available.
