Mortgage Underwriting
USDA Rural Development uses an automated system called GUS (Guaranteed
Underwriting System) for mortgage underwriting. GUS is available for approved lenders and I
understand they are getting it ready for Brokers in the near future. On
this page I'm just going to briefly highlight mortgage guidelines you need to be aware
of in regard to the USDA Rural Development 100% mortgage program. I won't be going into detail
for the consumer but if you have further questions
send an email. Risk LayersRisk layers are any
combination of credit waiver, payment shock, ratio waiver, non-traditional
credit, or buy down. Only one layer of risk should be allowed but if
two are being considered there must be very strong documentation of
compensating factors. Compensating FactorsCompensating
factors include PITI less than current rent, job history, 660+ credit
score, future increase in income due to education or experience, cash on
hand, considerable savings, and conservative use of credit. Non-U.S.
Citizens Qualified Aliens are OK Not Required
- Thermal Standards, typical insulation for the area applies
- Plans and specs only required if lender requires it
- Surveys are not required as long as title insurance is obtained
- Noise assessments
- Appraisal cost approach is only required if the lender needs it or
the appraiser suggest it is a good indicator of value
- Inspections and permits should not be submitted to RD. Also
building permits, C.O., warranties, well/septic/and termite letters
all should be retained in the lender file.
Seller Concessions Rural Development does not limit the
amount of seller concessions. Remember though that RD guarantees the
mortgage so if the lender has a limit they honor the underwriters
decision. Most lenders on this loan will allow 6%. Be sure to
check with the lender you are submitting the loan too. With
compensating factors, they may allow more.
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