USDA Rural Development is making changes! Effective Wednesday, March 9, 2016, the final rule for 7 CFR Part 3555 and the revised technical handbook, HB-1-3555, will apply for all Rural Development Conditional Commitments issued by USDA.
The revisions include many positive changes that will help potential USDA homebuyers qualify for financing. Here are a few of the updates:
- Relaxed guidelines about last minute credit report updates.
- Discount points are now an eligible use of proceeds for moderate income borrowers and can be financed
- Clarification of the eligibility of conventional credit available to the borrower
- Various income clarifications (qualifying income, interest/dividend income, withdrawals from businesses, etc.)
- Social Security benefits are treated as likely to continue unless the benefit verification letter specifically states otherwise
- Two tradelines instead of three are required for credit score validation (this helps for home buyers with limited credit)
- Only 12 months required after a Chapter 13 bankruptcy
- Applicants that are divorced with a short sale may be eligible
- New documentation guidance for previous mortgage liabilities (including divorces)
- Property flips requires lenders to “ensure any recently sold property’s value is strongly supported..”
There are many other changes to the Guaranteed Rural Housing program. USDA Rural Development has released a revisions document that details the changes, chapter by chapter, to the Handbook. The summary section on the right side of this document is a nice re-cap.
For more information about USDA loans, see 5 Easy Steps to Buying a Home with a USDA Loan in Yuma AZ or our USDA Loan Program Page.