Guaranteed Rural Housing Program

As a first-time home buyer, we recommend that you get prequalified once you have determined that you satisfy all of the program requirements. PMC's prequalification service, offered at no charge or obligation, will mail you a report detailing your maximum purchasing power under the specified program. PMC is proud of its accurate prequalification service.In our history, if our client didn't purchase above our recommended maximum sales price, we have never had a client declined for a mortgage loan! Click here to go to the prequalification page.

BENEFITS:

Down payment

• This program allows for a 0% down payment ! In fact, you can actually borrow more than the purchase price if the property appraises at a higher level. Your mortgage cannot exceed the appraised value. Most ordinary loan programs require a minimum of a 5% down payment (based on the sales price).

Closing costs & Prepaids

• These expenses incurred in a purchase transaction are allowed to be paid from the following sources: gift (from an immediate family member), seller contribution (unlimited - most ordinary loan programs restrict the seller contribution to 3% of the sales price), literal cash (call our office for details), and/or a lender contribution*.

Qualifying ratios

• Housing ratio = 29%: Your proposed housing payment cannot exceed 29% of your gross monthly income - most ordinary loan programs offer a maximum of only 28%, so you can in effect "buy more house."
• Debt ratio = 41%: Your proposed housing payment plus your monthly recurring debts cannot exceed 41% of your gross monthly income - most ordinary loan programs offer a maximum of only 36%, so again you can in effect "buy more house."

Reserves

• Under ordinary loan programs, the lender will not approve you unless you can demonstrate that you have at least 2 mortgage payments "in reserve" after all of the down payment, closing costs, and prepaids are paid. This requirement is waived under this program.

Monthly Mortgage Insurance

• No monthly payment! Most ordinary loan programs force the customer to pay, in part, to protect the lender's risk for making the loan. This mortgage insurance payment can run from .67% to 1.04% of the loan amount, on an annual basis. This benefit is a real savings to you.

Miscellaneous

• The loan may be assumable and there is no pre-payment penalty.

 

REQUIREMENTS:

Funds to Close

• While, in theory, all you need is enough to pay for the application fee ($303) and any inspections you choose (home inspection $275, well & septic inspections $150, termite inspection $85), we suggest, however, that you have a minimum of $2,000 - $3,000. These funds should be sitting in a savings, checking, or money market account (liquid), or in stocks, bonds, or certificates of deposit (non-liquid). These funds, however, are permitted to be derived from a gift. If you have these funds in cash or plan to liquidate a fixed asset (i.e. the sale of a car/motorcycle/collectible), please call our office for details.

Income

• Your combined gross annual income cannot exceed $44,800 (1 person household), $51,150 (2 person household), $57,550 (3 person household), or $63,950 (4 person household). These income limits are for properties located in Chester and Montgomery counties in the USDA-defined "rural areas." Philadelphia and Delaware county properties are not eligible. Call our office for the income limits in Bucks, Berks, and/or Lancaster counties.

Property

• Single family, 1 unit, owner-occupied residences only - no duplexes, investment properties, etc.
• PUDs and condos are eligible, but only if over 70% owner occupied and approved by FNMA, FHLMC, FHA, or the VA and the association has been turned over to the unit owners
• Land value cannot exceed 30% of the total property value (normally 1 - 5 acres max)
• No in-ground swimming pools, working farms, or hobby farms
• Property must conform to FHA standards - appraiser to determine any and all needed repairs. In additon, the property needs to meet certain thermal insulation standards.

Property Location

• The property that you wish to purchase must be located in a USDA-defined "rural area." This would be loosely defined as southern, western, and northern Chester County, practically all of Lancaster County except for the city of Lancaster and south to the Maryland border, the western fringes of Montgomery County, and practically all of Bucks and Berks counties. PMC has the USDA provided maps if you wish us to look up a particular town or address.

Loan Amount

• Your mortgage must be greater than $20,000, but not exceed $137,750.

Credit

• Your credit report must demonstrate that you haven't incurred a single derogatory payment (30 days late or beyond) for at least the past 12 months.

 

COSTS:

• Market interest rate/points for a 30-year fixed-rate mortgage (no "add-ons") - - - call 610-436-5397 for current rates.
  
  
• Mortgage insurance - an upfront "Guarantee Fee" of 1.0% is imposed. However, this is considerably less than FHA or VA loans and the fee may be financed into the mortgage.
  
  
• Cash-to-Close: We will detail every expense on our prequalification report. Click here to go the prequalification page

*NOTES*:

• Lender contribution (If needed) - As a rule a thumb, if needed, the mortgage company can give you about 2 points (each point is 1% of the loan amount - so on a $100,000 house with a $95,000 mortgage, 2 points = $1,900),To offset this contribution, the mortgage company will increase the interest rate by about 0.50%. This rule of thumb is not exact -- call 610-436-5397 for a quote (just like interest rates, this may change daily).

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