Financing in Long Pond>Question Details

Momof3, Home Buyer in 18322

Are USDA loans better than Conventional loans..?

Asked by Momof3, 18322 Mon Sep 21, 2009

Help the community by answering this question:

Answers

5
Thanks for all the replies, We have outstanding credit 795-805 and could afford the mortgage. the only problem is the 20% down. We can come up with 3.5% if we did FHA but then we would still have to pay PMI right.

I am aware of the 2% But is there an annual renewal fee of 0.5% each year. I also read there was also an Application Fee of $2,500. Can that be right?? Seems a bit outrageous . thanks in advance.
0 votes Thank Flag Link Mon Sep 21, 2009
As stated earlier if you have 20% to put down and a credit score greater than or equal to 740, then conventional would be your best option. Otherwise the best choice is USDA.

USDA does have 2 limitations:

1. Property eligibility. The property must be located in a eligible area. You can check this out at: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do click on Single Family Housing in the Property Eligibility section, click Accept, then narrow by State, and area, or type in the property location.

2. Income. The total household income is used, even if someone in the household is not on the loan. The income limits can be found on the same website, under income limits, guaranteed. There is a deduction for household income for Child Care expenses (for those 12 and under of the actual amount), and $480 per year for each member 18 or younger, disabled or full time student.

USDA allows for 100% financing based off the appraised value (some lenders have overlays not allowing this) which means that you could even potentially finance the closing costs as well. You can also have the seller pay for closings costs as well.

USDA is a 30 year fixed rate, no mortgage insurance, 100% loan to value, at a low rate.
0 votes Thank Flag Link Mon Sep 21, 2009
USDA loans are primarily for purchase transactions. Is this a purchase or refinance? Also, USDA had many restrictions such as income and where the property is located. You can have up to 115% of median income for your county. Click on this link for more information http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

USDA loans also require a 2% upfront premium, so they are very expensive in comparison to conventional financing.
0 votes Thank Flag Link Mon Sep 21, 2009
USDA loans are the best option if you want 100% financing.
0 votes Thank Flag Link Mon Sep 21, 2009
Momof3,

All depends on what your scenario is. If you have a down payment of 20%, good credit, etc, go with the conventional loan. IF you dont have that scenario, the USDA is a great program to help you. Each loan has its place...
0 votes Thank Flag Link Mon Sep 21, 2009
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer