USDA Guaranteed Loan Refinance – Post Divorce and Legal Separation

Date: September 12, 2012

In order to refinance a USDA Guaranteed Loan after a divorce the borrower to the transaction that wants to maintain ownership of the property must be able to meet several additional requirements in order to qualify for the new USDA Loan. In addition to providing a divorce decree specifying who is to own the property, the remaining borrower must be able to qualify for the new mortgage without their former spouses or co-borrowers income to determine the debt-to-income ratio. When calculating income the borrower will not be able to use court order child support or alimony in the income calculations unless there is a documented twelve payment history prior to making a loan application.

The USDA Guaranteed Loan Refinance will still allow for an appraisal exemption that is available on all USDA Streamline Refinances. When removing a borrower from title because of divorce or legal separation the remaining borrower will not be eligible to take advantage of the USDA Pilot Program, but can still use the USDA Streamline Refinance.

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