Transcription
If you have low to very low income, as defined as below the median standards for your area that you live in, this video is for you. There is a program to help you potentially get into a home. My name is Jen Hernandez. I've done loans for many years, since 1995. I've helped thousands of families, and I'm here to give you real facts—no BS—so that you can buy a home this year.
USDA is the United States Department of Agriculture, and they have a loan called a 502 direct loan. This loan has to be taken out by USDA directly; you wouldn't be able to come to someone like me. But this video is going to go over the basics, and I'm going to provide some links down below in the description so that you know how to get started right away. The cool thing about USDA is they offer a 0% down loan, and in this program, you can even possibly get some subsidy money that helps you make your monthly payment every single month.
Okay, so here's a couple of basics: you have to meet the minimum income guidelines for your area. Now, every county is very, very different. When I looked at the link myself when I was doing research, I saw numbers anywhere from 30,000 to 40 or 50,000 as a maximum, depending on your area. So obviously, you're going to need to see the link below. I've got that link; you can check out the area where you live, and if you're below that income level on the chart, you very well could qualify for this program.
The other thing is that the house that you buy must be in a USDA area, which means that it has to be in a rural area. So again, there's a link where you would put in an address, and you're able to see a map and see if where you want to live qualifies for a USDA loan. They're also going to have to verify that you don't have access to safe and affordable housing as of right now. So I'm sure there's a questionnaire that you're going to have to fill out, talk about your current living situation, so be prepared with all of those kind of details. You also have to not be able to qualify for any other type of loans. So this is a perfect program where you're going to prove to them, "Hey, I don't have access to safe, affordable housing, and I'm not able to get a loan by any other means."
This does have to be your primary residence; this can't be used for investment. You have to be at least 18 in order to purchase and be on the loan for this type of a home. You do have to be a citizen or an eligible non-citizen. You know, when we do loans, we have to prove that someone is legally here in the US, which means that they're a resident alien, or they, you know, they have their green card, or you could have a permissible visa, uh, like a work permit, in order to be lawfully in the United States.
I so I know that there's a lot of people when they call us, they're like, "Oh, hey, I want 3 acres and I want a little bitty house and all this land," which sounds beautiful, but on this program, these houses that are available are going to be minimal; they're going to be on small amounts of land, 2,000 square ft or less and minimal land. Also, you can't currently own a home. So you could have owned a home before, but you would have sold that home or not have access to it anymore, and this is going to be your only logical place that you are able to live.
So what does this loan do? It gives you access to 0% down; there's no PMI. The interest rate that they were talking about was like 2 to 3 percentage points below what people could get on their own on other types of loans, so that's super good. Also, you get to pay back the loan between 33 and 38 years. So like on a regular FHA mortgage or even a regular USDA loan, you have to pay the loan back in a maximum of 30 years, but they stretch it a little bit more on these 502 Direct Loans, and they actually stretch your payment so that your payments are as low as possible, to 33 to 38 years. You also could qualify for a subsidy, which is an amount of money given to you per month to offset your payment. So let's say that your income isn't enough to pay the payment every month; you might qualify for a subsidy in order to do that. Now, beware that subsidy does accrue, and it adds on to your loan balance. So at some point in the future when you sell the home, you will have to pay that subsidy back. It's really cool; you can use it again not only to make the monthly mortgage payment but to actually renovate the home and make something livable.
One important thing that you need to know is that if you are receiving the subsidy, the USDA office is going to want to reverify income; you might now not qualify for any future subsidy. How do I qualify? So expect that they are going to pull your credit. Now, they do allow exceptions or letters of explanation on credits. Be prepared to document things. If you know that you have late payments, be prepared to be able to explain why you might have had a hardship. Lenders actually really like to hear, "Hey, I had a hardship because of a sickness or hardship because of a job loss." Those are understandable reasons. It can't be just like, "Oh, I just didn't pay my bills; I didn't get the thing in the mail." That's not a good reason. Be prepared to have a good letter of explanation if you have any credit issues. Okay, they do understand that things happen. For the most part, your credit does need to be between 620 and 640, but like I said, they are going to allow some letters of explanation about that. In other words, there's really no minimum; like your credit score could be in the 500s, but be ready to explain. And regarding your income, just remember, like we talked about in the beginning, they are going to verify that you meet the standards below that median or low-to-median income that's been defined. So you can check, like, "Hey, where is my income in relation to this particular county where I live? Will I qualify for this 502 direct program?"
Lastly, how do you apply? So you do have to go to a USDA field office, and it'll give you an address, and you'll have to go to that address in person to make application. There are forms you're going to have to fill out and download some forms ahead of time. They also talk about being able to have a certified packager. Now, what this certified packager does—now there is going to be a fee for that—is they help you with the whole application process. It's like, "Been there, done that; why don't I make sure I don't make mistakes on the application," and hire the professional. Now, I don't know what the fees are, but I am going to put the link down below to the certified packagers as to who they are, where they are in your area, so you can find someone, and you can just call them and see if that's something that you could do. But you don't have to do that; you can go to the local office on your own and apply by yourself.
So are you needing to improve your score, and you think that your credit might be too low for either a 502 direct loan or any other kind of loan? You want to make sure and watch our playlist on credit that I have here for you. And I'd love to hear your questions. Thanks for joining us today. Talk to you soon.