Tag: Fannie Mae

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25 Questions and Answers

1 What is the guarantee?
USDA Rural Development provides the full faith and assurance of the U.S Government
that any financial loss resulting from servicing the loan will be reimbursed in full up to
an amount not exceeding 90% of the original loan amount. All loss up to an amount not
exceeding 35% of the original loan is fully reimbursed. Losses exceeding 35% are 85%
reimbursed.
2 What is the advantage to the customer?
100 percent financing, fixed interest rate, no MIP/PMI, and no restrictions on size or
design are just a few of the advantages.
3 What are the eligibility requirements?
Have adequate and dependable income (up to 115 percent of adjusted area median
income), have acceptable credit, do not own a dwelling in the local commuting area, US
Citizen or permanent resident, have the ability to personally occupy the home on a
permanent basis, and do not have funds for a 20% down payment loan plus closing and
moving expenses.
4 Can a Broker originate Guaranteed loans? Yes, however only Approved lenders may underwrite & submit loans.
5 How long does it take to get an answer?
Our goal is a 2 to 5 day turnaround. Time will be longer in some offices due to the large
number of guarantee requests received.
6 What is the maximum fixed Interest Rate and term?
Fannie Mae 90 day delivery rate plus 60 basis points rounded up to nearest quarter of
one percent Or no more than the Lender’s published VA rate for first mortgage loans
with no discount points. The term is 30 years.
7 What is the maximum loan amount? The Loan amount is limited by the market value and repayment ability.
8 What is the maximum Loan to Value? It can be up to 100% LTV plus the Agency guarantee fee.
9 What is the Guarantee Fee? As of July 2026 the upfront guarantee fee is 1.00% of the loan amount and it can be financed into the loan. There is also an annual fee of 0.35% of the unpaid principal balance, collected monthly as part of your payment.
10 What are the qualifying ratios? PITI Ratio 29 percent, TD Ratio 41 percent on a manual underwrite.
Those ratios can be waived to 32 percent and 44 percent when every applicant on the loan has a credit score of 680 or higher and the file has a documented compensating factor.
11 Do we show deferred student loans in the debt ratio?
Deferred student loans should be included in the debt ratio calculations for Guaranteed
Loans regardless of the deferment period.
12 What is the minimum credit score?
USDA does not publish a minimum credit score in its handbook, HB-1-3555. What drives the file is the underwriting recommendation you get from USDA’s automated system, GUS. A 640 middle score will typically return a GUS Accept. Below 640 the file is manually underwritten, which is still doable. The 640 floor you hear quoted is an overlay most lenders impose on themselves, not a USDA rule.
13 What about location? The dwelling must be located in eligible rural area (See eligibility site)
http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
14 What about refinancing? Limited to existing USDA Rural Development guaranteed or direct loans.
15 Can loans include acreage?
Possibly. The acreage must not contain any income producing facilities and the value of
acreage may not exceed 30% of the total property value.
16 Can Manufactured Homes be financed? Yes. New units from a dealer lot are eligible, and since May 5, 2025 existing (used) manufactured homes are eligible as well, in all 50 states including Kentucky. An existing unit has to have been manufactured within 20 years of the loan closing date, sit on a permanent foundation, have never been installed at another homesite, be at least 400 square feet, carry both the HUD certification label and the HUD data plate, and have no alterations made after it left the factory other than an engineered porch or deck.
17 What about an in-ground swimming pool? In-ground and above-ground pools are both eligible, and there is no requirement to subtract the value of the pool on an existing home. You just cannot use repair or rehab funds to install a new pool.
18 What are the required inspections?
The property has to meet the minimum property requirements in HUD Handbook 4000.1. Any appraiser licensed or certified in Kentucky can perform the appraisal and verify the adequacy and working order of the electrical, plumbing, heating, water and waste disposal systems on an existing dwelling.
19 Will USDA Rural Development issue a letter asking the Approved Lender to make
a loan? No. This is the Approved Lender‟s loan. They underwrite the loan and decide if it meets
their standards and Agency standards before submitting.
20 Is homebuyer education required? Homebuyer education is not required, however it is recommended.
21 Are seller concessions allowed? Yes. Rural Development does not restrict the amount of seller concessions.
22 Who approves the Appraiser? Nobody at USDA. Any appraiser licensed or certified by the state of Kentucky can complete the appraisal. USDA does not maintain an approved appraiser list and does not require an FHA roster appraiser.
23 Can necessary repairs be included in loan? Yes. An „as improved‟ appraisal will be needed to include cost of repairs.
24 Are alternate verifying income documents allowed?
Yes. Paycheck stubs, payroll earnings statements and W-2 tax forms for previous 2 tax
years, and telephone verification of employment.
25 Who buys Guaranteed Housing Loans? JP Morgan , FHLB, Fannie Mae, Ginnie Mae, and other

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