Chris Graves, Certified Mortgage Advisor

Providing Mortgage Services in MA, NH, ME, RI and FL

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Funding for USDA Home Loans Running Out

USDA Home Loans are offered in rural and semi-rural areas. There’s a misconception that USDA loans are only for farmers. In fact, they are used by many single-family home buyers who are not farmers but are simply buying homes in areas approved for USDA financing. This loan option is appealing primarily because it offers 100% financing for the purchase of real estate. Unfortunately, funding for USDA home loans is running out for this program.

How Funding for USDA Home Loans Works

USDA loans work a little differently than other government sponsored loans. With FHA and VA loans, approved lenders may underwrite and fund the loan. Only the mortgage insurance is guaranteed by VA or FHA. With USDA, loans must be underwritten directly by USDA. Funding for the loans come directly from an account controlled by the Federal Government. When this account runs dry, USDA loans cannot be issued.

Why Funds Are Running Out

USDA funds are not only used for home mortgages but also for other farm assistance programs. These programs have increased in popularity recently. Funds are therefore expected to run out before the fiscal year ends on September 30th. Funding for the 2017 fiscal year has not yet been approved.

What This Means for Home Buyers using USDA Home Loans

Home buyers intending to use USDA home loans should be concerned about whether their loans will be funded. If funding runs out this fiscal year before they can close on their new home, they may need to look for alternative home financing options. Furthermore, funding for the next fiscal year is uncertain, so waiting is not a good option. Buyers should aim to close quickly to secure USDA financing.

Similarly, sellers should be concerned as well. If a seller has accepted an offer from a buyer who is using USDA financing, that buyer’s ability to close will be contingent upon availability of USDA funds. Sellers may want to inquire about whether the buyer has a backup plan (another mortgage program for which they qualify).

Learn More About Funding for USDA Home Loans

If you are concerned about funding for USDA home loans running out, contact your loan officer. It’s never too early to develop a plan of action to either take advantage of current USDA funds available or explore other financing programs. Contact me to discuss your full range of options and receive a free pre-approval.

 

Chris Graves's avatar

Chris Graves

I grew up in Massachusetts, spent the majority of my young adult life in Boston, and own a home in Windham NH. I have owned properties in MA and NH. I specialize in mortgage lending in Massachusetts and New Hampshire and my company does have the ability to lend in other states. I graduated from the University of Massachusetts in Amherst Massachusetts in 2002. I have a Bachelor’s in Science. In addition to managing a team of loan officers my personal loan production is always in the top of the entire of company. I have personally been in the mortgage business for over 13 years. I pride myself with taking my clients from application to close in the smoothest and quickest way possible, while keeping them well informed during the entire process. I originate my own loans from start to finish and work hand in hand with my loan processors & underwriters to make sure I am updated to the minute with all of my files. I stay up to date with lending guidelines and speak with underwriters on a daily basis to ensure I am aware of all of the lending guidelines in place.