Lisa Montes-"Your Home Retriever"
They are similar to FHA and VA in that they do not have a prescribed credit score (although most banks want a 620) and they offer up to 100% financing (like VA).
They are different from FHA in that the Guarantee Fee is a one-time charge, but it is actually lower than the VA Funding Fee.
USDA charges 2.0% upfront (and can be rolled into the loan) and nothing after.
VA charges 2.15% upfront (and can be rolled into the loan) and nothing after, but charges 3.3% if the loan is the second or subsequent time a borrower is using his eligibility. Disabled veterans can pay a lot less.
FHA charges both an upfront MIP fee and an on-going monthly MIP fee. Upfront fees for FHA are 1.5% at closing (that can be rolled into the loan) plus 0.5% per year (divided into monthly payments of 0.04167% per month). After 10/1/2009, risk-based premiums for FHA may come into play (varying by credit score and loan-to-value) -- we'll know more then.
FHA also requires 3.5% down payment, as opposed to 0% for VA and USDA.
USDA is an old government loan that is still on the books. It has geographic boundaries for use, which FHA doesn't, so you first must compare the location where you would like to buy against the program boundaries. The program was developed to stimulate home sales for low-income individuals or families in rural areas. Terms of the loans are 30 years. There is no required down-payment. A reasonable credit history is required. And, there is a limitation of income to use the program of up to 115% of the median income for the area of purchase.
There are other requirements, including a seller contribution toward buyer closing costs. You can view the program requirements online at http://www.rurdev.usda.gov. Eligibility and the geographic boundaries are all available online as well.
I have used this loan in the past, very successfully, to help individuals and single-parent households get into neighborhoods in Little Elm and Aubrey. The geographic boundaries keep us from using it in many cases in Dallas/Fort Worth. Some loan officers won't offer it - usually because they've never been exposed to it or work in an area that doesn't qualify. Don't be put off by that. Good Realtors will have a list of lending resources to meet most only loan program.
Have a blessed day!
Ronda Allen, Realtor
Certified Purchasing Manager
Keith Dobbs Team at RE/MAX Dallas Suburbs
The following is from my BLOG posted in February:
" In case you missed it, the USDA has a home loan program for rural areas (web site). The USDA Rural Developmentâ€™s Rural Economic Development Loan and Grant program is outlined in a January 2009 news release.
No-interest loans and grants are available from the $48.5 million available to spur development in rural areas of the country. Applications must be received by March 31st for the 3rd quarter funding and June 30th for the 4th quarter funding. The application procedures and other information can be found in the December 29, 2008 FEDERAL REGISTER, page 79438.
While this is just a brief heads up on this federal program, it may be exactly what you need for your new home purchase. Make sure your real estate agent knows all about it. "
As always, call me at (210) 273-9082 with any questions, without obligation.
Please visit my blog and use the links to research some more. Also, call your local lender who will be able to assist further.
Dominick Dina, Broker/owner
Christian Realty San Antonio