USDA has a new Texas only guideline. We no longer have to count the debts for the NPS (NPS=Non-Purchasing Souse…the definition of a NPS is a spouse that is not going on the loan, and not using their income to qualify for the loan, but going on title and living there), but we must still provide the NPS credit report. At this time, all other community property states will require the NPS debts to be included in the DTI (Debt To Income Ratio). This may make it easier to qualify for some households.
Does USDA have Mortgage Insurance?
When taking on a USDA loan, there is an up front participation fee by USDA that is rolled into the loan…it’s not considered/called mortgage insurance. That fee is roughly 2% of the loan amount. Additional, there is what is called an annual fee as well, and it’s .4%. Although this fee is called annual, it’s actually divided by 12 and added in as part of your monthly payment. For example, if your loan amount before the USDA participation fee is $100,000, you multiply the $100,000 times the .4% and get $400 as the annual amount. You divide that $400 by 12, and you get $33.33…you add this to your monthly payment.
USDA changed their boundary lines over a year ago, and I video blogged about this over a year ago. These changes have taken effect. You can contact me if you would like me to check to see if your home or the home you are interested in is eligible for USDA financing. Or, you can try to find out yourself if a home is in that USDA eligibility area.