The new USDA RD Guarantee Fee structure has been set in regards to Rural Housing loans. The new Guarantee Fees start October 1, 2015 and will be effective for Single Family Housing, 502 Guaranteed loans in fiscal year of 2016. The new upfront guarantee fee will change from 2 percent of the loan amount to 2.75 percent of the loan amount. The current annual fee monthly PMI of .50% will remain unchanged. This annual fee is actually a monthly charge that USDA collects on all loans – think of this similar to private mortgage insurance or PMI. The upfront guarantee fee is a one-time fee that is charged by all government mortgage programs ( USDA, FHA, VA) and commonly rolled into the borrowers total loan amount.
Current guarantee fee on a $175,000 loan = $3,500. Total adjusted loan amount with guarantee fee = $178,500
New guarantee fee on a $175,000 loan starting 10/1/2015 = $4,812.50. Total adjusted loan amount with new guarantee fee = $179,812.50
This is a pretty big increase and will start for any USDA loans obligated on October 1, 2015 through September 30, 2016. The new higher fee’s will impact both USDA purchase and USDA refi programs (Pilot, Streamline, etc)
It’s a good idea of buyers / lenders to insure their package is received by USDA and in the system no later than the 2nd week of September in order to stay at the current 2% Guarantee Fee. Keep in mind, it generally takes the lender a 2-3 weeks to get a package ready enough to sent to USDA for final approval.
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New USDA RD Fee Chart 2015 -2016
Please note: If you have questions regarding an existing USDA loan already in process with another mortgage company, you will need to speak to them directly for status, etc.