In Indiana, USDA Rural Housing Loans are a good way for a potential home buyer to obtain a 100% mortgage, with no down payment required. The program, which is insured by the US Department of Agriculture, sets reasonable maximum income limits for households wanting to obtain loans under the program, and, like FHA loans, requires both upfront and monthly mortgage insurance premiums.

Currently, the income limit for the Indianapolis Metro area is $79,000 for all income earners in the household, combined. You can assess the income requirements, per Indiana county by clicking here. In addition to the income requirements, the house that you want to purchase must be in an eligible area and meet certain minimum household standards. To see whether the home that you want to purchase is eligible for a USDA loan, check here.

There is no specific limit to the loan amount or purchase price, but you are generally capped at a debt-to-income ratio of 41%. The available rates are generally consistent with, or lower than, prevailing FHA rates, and the mortgage insurance premiums are affordable, and can be financed into the loan. Currently, USDA loans require a 2% upfront premium, and an additional 0.40% monthly premium; while FHA loans require a 1.75% upfront premium, in addition to a monthly mortgage insurance premium that can be as high as 1.55% (annually).

Using the scenario above, a home with a $100,000 purchase price can be financed with a 100% loan, plus the upfront mortgage insurance premium can be financed, bringing the total loan amount to $102,000. The monthly mortgage insurance premium would be $33.33.

The USDA loan must be used for the purchase or refinance of a primary residence, so investment properties and working farms would not meet the eligibility requirements of the program.

If you already have a USDA mortgage in place, it can be refinanced without any income or asset requirements, and there is no appraisal required.

If you are interested in obtaining details regarding a USDA loan for a purchase in the state of Indiana, contact First Indiana Mortgage at 888-627-2002.

In Indiana, USDA Rural Housing Loans are a good way for a potential home buyer to obtain a 100% mortgage, with no down payment required. The program, which is insured by the US Department of Agriculture, sets reasonable maximum income limits for households wanting to obtain loans under the program, and, like FHA loans, requires […]

The proposed Fair Credit Reporting Improvement Act of 2014 proposes to shorten the time that adverse credit information appears on individual credit profiles, which will lead to higher mortgage interest rates. Here is why:

Currently, adverse credit information will remain on credit reports for a period of up to seven years; under the proposed law, that period would be shortened to four years, and if a non-performing credit account is paid or settled, that account would be removed from the credit profile in approximately 45-days.

What this will do is encourage borrowers to default on loans, because there will be no consequences for not paying creditors back in full. Once the derogatory information is removed, presto, the potential borrower will look like a good credit risk. While the current credit scoring model is not perfect, it rightfully factors in the non-payment of debts, and is a model in which lenders can reasonably assess a potential borrower’s willingness and ability to repay debts.

Creditors will have no choice but to raise rates for high credit score borrowers (who currently receive better rates) to accommodate for the increased risk posed by the deadbeats who would now appear to be good credit risks. While legislators may mean well, surprisingly, this law does not appear to have been well though out.

If you are an Indiana resident searching for a mortgage, visit www.firstindianamortgage.com for a free, no obligation rate quote.

The proposed Fair Credit Reporting Improvement Act of 2014 proposes to shorten the time that adverse credit information appears on individual credit profiles, which will lead to higher mortgage interest rates. Here is why: Currently, adverse credit information will remain on credit reports for a period of up to seven years; under the proposed law, […]