USDA is running out of money and as of yet, we haven’t heard of any new funding coming down the pipeline. In fact, we are hearing from Rural Housing in DC that there may be no re-issurance fo these type of funds.
USDA loans are property specific meaning that even if you are looking in a rural type of area, the address has to be eligible for an USDA loan. The same is true in urban areas. Some of those addresses are USDA eligible.
These loans were great for borrowers who live in outer areas as it required little or no out of pocket cash to purchase the home. And for borrowers who had good credit but no cash, this was a perfect type of loan for them.
But we are hearing from different lenders that they are no longer accepting applications for these types of loans. If your loan has been locked as an USDA loan you should be fine but check to be sure. Otherwise, as lender shut down these loans, you will need to find another loan product.
Please don’t assume that USDA will come back. Banks that did hold on to these loans previously when money run out are now indicating that they won’t do so again. Most likely this is due to what they are hearing from DC as well.
Be pro-active. Start today! Call your loan originator professional to get your loan locked. Or explore other type of loan programs that will suit your needs, such as FHA loans.
And as always, I will report daily on twitter @mmtgsolutions on the mortgage interest rates and what to expect for the day. If one of these reports moves the market in a significant manner, I’ll write about it here.
Please remember, I welcome your comments and questions to this and my other posts.
To an inspiring week,
Betsy Moore
206-331-2749
Twitter Updates
6 April 2010 at 10:54 am
so whoever was approved for an usda loan is gonna be left hanging cause funds are gonna expire by the end of this month? what happens next?
6 April 2010 at 2:51 pm
Hi, Ingrid,
If you were approved then that money has been taken out of the pot already.
The good news is I just heard that Congress has approved a new pot of money for Fiscal Year 2010. A major portion of it will be available for purchase and the reminder will be available for refinancing.
As soon as I can get more information, I will be posting on this renewal of funds.
Thank you for asking!
8 April 2010 at 2:28 pm
My USDA loan is currently in line for approval and we are just hoping to get through in time. Where did you hear Congress has approved more money? That would be fantastic! Thanks
9 April 2010 at 7:53 am
Hi, Dan,
I can understand how frustrating this is. This is what I’ve heard. Some lenders still have USDA money. Some lenders that do have money won’t let you lock in your loan until you have final approval. Locking in your interest rate is the key as that takes those USDA dollars off the table.
I have heard some talk but I haven’t been able to get it verified. As soon as I do, I’ll post.
And thank you for question.
Betsy
12 April 2010 at 4:16 am
What does the rate lock have to do with securing funds from USDA?
Our rate was locked on 3/4/10 and was sent to USDA around 4/1/10. It was expected to take up to 3 weeks to hear back due to their increased volume. Our loan officer hasn’t said anything about the rate lock securing money. As far as I know it is still up in the air until we get our guarantee of funds back from the USDA underwriters.
16 April 2010 at 7:54 am
Hi, Dan,
I just wanted you to know that Congress has a new USDA bill in front of them. As to when it will be approved is anyone’s guess. But at least they have started the process.
16 April 2010 at 7:56 am
Hi, Ingrid,
I just wanted you to know that a new USDA bill is in front of Congress. As to when it will be approved is anyone’s guess. But at least it is a start in the right direction.
23 April 2010 at 4:35 pm
Ok so we were pre approved for the usda loan in februaury and are now in the process of building a house. What happens to us? Are we just out of luck and have to get a different loan or is there anything we can do?
23 April 2010 at 5:09 pm
Hi, Kris,
The good news is that a new USDA bill has just left committee. It is expected to get through Congress by next week or the week after. I have heard that there are some changes to the guidelines but nothing is set in stone until it is approved and signed into law.
I would go back to your loan professional and ask them about your approval process. If you are building, it may be a different process. So please talk to them about it.
But new funding for this bill has left committee and here’s a link to the bill. http://www.box.net/shared/0afz9s6un8
I do hope that helps.
Betsy
25 May 2010 at 6:37 am
Betsy,
Locking the rate does not reserve the funds at USDA. The only way to reserve funds at USDA is to get your Conditional Commitment from the USDA field office that reviews the file. Once you have that, the funds are reserved and you can be assured of closing your loan if you are able to meet any conditions on the commitment.
The program is out of money, except in certain areas that have been designated at disaster areas. Call the local USDA office and see if your county is so designated.
Congress has not yet approved funds. They are working out the best way to bring this program back and have it be self sufficient (ie: not cost the taxpayers money). So far, it looks like the new UFMIP fee will be set at 3.5%, with the ability to finance that fee just like before. Congress was actually considering making that a 4% fee.
The bill has been read twice in the Senate, and sent to committee now, and is wrapped up in another bill called the Financial Stability Act. Once that whole thing passes we’ll know where we stand.
Lynn
26 May 2010 at 6:37 pm
Hi, I live in Wilmington NC and have recently been approved for a first time home buyer loan. The loan was sent to UDSA on 05/10/2010 and I was set for a closing date of 05/20/2010. I was told on 5/19/10 that USDA was out of money and it will be a week or two untill they have more money. Since my loan was approved and locked in with the mortgage company am i guaranteed a USDA loan, and is my money for the loan already taken out of the pot that USDA has. I also read something online stating that it could be October before the USDA starts lending out money again. Thanks for your help
Dustin
19 July 2010 at 11:39 am
Hello, I live in Lee County, Fl. I was approved for a 1st time home buyer with the USDA. I was going to do my closing on the 29th of this month and now my realtor told me that the USDA had no more funds until sometime in OCT. So now were”re going to go thru FHA and see what happens now.
28 July 2010 at 8:33 am
Linda, check out my post for today! Good news!
8 December 2010 at 1:12 pm
I was wondering if you have heard if the USDA has run out of money for this month (Dec). Someone is trying is to purchase our house with a USDA loan and we had a committal letter to sign papers friday. As of today they were told they were out of money?? Do you have any updates on funding?? Does it matter where you are buying?? Thanks for your help!
16 December 2010 at 10:19 am
Sonia,
We have been told that Chase has been doing. Check out the post from John.
Betsy
27 December 2010 at 12:49 pm
We have generally had excellent success with rural housing loans in our area. Yet recently a few homebuyers are opting other options due to the higher initial charges.
23 January 2011 at 5:12 pm
I don’t do that many USDA but I would like to do more.