The USDA has recently announced a USDA streamline pilot program and for people who are currently in a USDA loan and in one of the qualifying areas where the pilot is being held, this is good news because rates are low and the chance is high that they may be able to take advantage of the program.
The program is not available in all areas.
USDA Streamline Program: Important Guidelines
The streamline program for USDA loans is a pilot program – but here are the basic guidelines:
- It is only available for an existing USDA rural home loan.
- The new interest rate must be a fixed rate that is at least 1% below the loan’s current USDA interest rate
- All USDA Streamline Refinance loans are only available for a 30 year fixed rate
- No appraisal, no credit, and no income documentation required
- Some lenders may require a property inspection to ensure that the property is still in line with all USDA housing guidelines
- Must be manually underwritten and not processed through the guaranteed underwriting system
- Can have multiple closing cost options as long as they are “reasonable and customary”
- USDA income guidelines and restrictions still apply
USDA Streamline Frequently Asked Questions
With any loan program, there are bound to have questions. With a “pilot” loan program? There are bound to be even more questions. Be sure to check back often as we will update with more information as we get it.
Can you get cash back or cash out in the program?
No. You can only get cash back for eligible loan costs that you have advanced personal funds for.
Is an appraisal required?
Maybe. It depends on whether the loan has received subsidy or not. Check with your loan officer for more details – but the general guideline is: No appraisal required for direct loans to guaranteed loans that have never received subsidy. Yes, an appraisal is required for loans that have received subsidy. The reason for the appraisal is for the purpose of calculating the subsidy recapture.
What is the interest rate?
The interest rate on a USDA streamline is required to be a fixed rate loan that is priced at a minimum of 100 basis points below the current interest rate on the loan. So if your current loan is at 6%, your new loan must be at 5% or lower.
What are the fees for the USDA streamline?
The fees will vary between lenders. Lenders can charge “normal and customary” closing costs – which means that you need to shop multiple lenders in order to get the best deal.
What is the minimum credit score required?
For the program, lenders only need to verify that the last 12 mortgage payments have been made on time and do not need to verify a credit score.
Can someone be added or deleted to the loan during the process?
Generally speaking – no. An exception is if someone on the loan has died, then they can be removed from the loan.
Is the program available in all states?
Currently, no. The program is currently available in: AK, AL, AR, AZ, CA, CO, FL,GA, ID, IL, IN, KS, KY, MI, MO, MS, MT,ND, NV,NJ,NM,NC,OH,OK,OR, RI, SC, SD, TN, TX,UT, WA,WI, WV.
Get the best deal on the USDA streamline program by shopping multiple lenders. Getting a quote for the USDA streamline program is fast, easy and you can start right here. Get a free USDA streamline quote today.