USDA Funding Update – Fiscal 2011

Date: October 1, 2010
Source Document
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The U.S. Department of Agriculture Rural Development program will provide Conditional Commitment for the Single Family Housing Loan Program for purchase transactions in fiscal year 2011, which started October 1, 2010. The Guarantee Fee will be 3.50% of the loan amount.

What does Conditional Commitment mean? For lenders Conditional Commitment means:

  • USDA will accept applications (just for purchase transactions at this time), underwrite, approve and issue a "Conditional Commitment."
  • Lenders will continue to fund loans allowing for settlements to occur.
  • Once funds become available USDA will fund the loans and lenders will receive a Loan Note Guarantee.
  • Lenders stand the risk of default prior to the Loan Note Guarantee being issued.
For homebuyers wanting to use the USDA loan program this is a non-issue as lenders have been through this process with USDA several times over the last few years. Lenders know that USDA will be fully funded shortly and are willing to accept some risk during this interim period in which USDA ramps up for the new Federal Government fiscal year.

If you are considering financing an upcoming home purchase using a USDA loan and want to learn more about your financing options through the USDA Rural Development Loan Program complete the contact form or call (866) 552-5912 to speak to your local Pennsylvania loan professional.

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