The 100% USDA home loan just got a little better thanks to recent reductions in the upfront Guarantee Fee and Annual Fee. USDA Rural Housing loans are very similar in other government mortgage programs like FHA, VA, in that they require a one-time Guarantee Fee (also know as Funding Fee) This fee is typically added to the home buyers overall mortgage loan balance. This fee for USDA Rural Development loans was 2.75% of the home buyers loan amount. However, as of 10-1-2016 the fee has been reduced to only 1% of the loan amount! This is welcome news as this change will help reduce home buyers loan amounts by over $2,500 on average.
In addition to the one-time Guarantee Fee, the monthly insurance premium costs (also known as the Annual Fee) has been reduced. The percentage factor of the USDA annual fee has been reduced from .50% to .35% of the home buyers loan amount. This will help save $30-$40 per month as well.
All these changes apply to both new USDA home purchase and USDA refinance transactions. Homeowners that currently have a USDA loan can only take advantage of the lower fee chart by refinancing their existing USDA loan. However, often times this only makes sense if the homeowner is also receiving a significant interest rate reduction at the same time. The USDA Streamline Assist refinance program is pretty simple, we have listed some important program requirements and benefits below. Read more about the USDA refinance here.
- The home owner loan must have been originally backed by USDA. If you are a homeowner that has a different type of loan like FHA or VA, contact us below to discuss special refinance programs designed specifically for these types of loans.
- No late mortgage payments in the last 12 months.
- The home cannot be listed for sale at the time of application.
- No new appraisal or home inspections needed. Homeowners that owe more on their mortgage than home value are eligible.
- No calculation of borrowers debt to income ratios – only applies to the refinance program.
- For home owners that do have equity in their home, NO cash out is permitted. Only a reduction in the borrower’s interest rate, guarantee fee, annual fee.
- All closing costs can be included in the borrower’s new loan. No cash out of pocket needed from the borrower.
- The program is available to eligible home owners in all 50 states. This includes properties that are NO longer located in the current USDA eligible property map – but originally were.
Questions about any of the government loan programs? Please call us at ph: 800-871-2636 or just submit the Request Contact form at the top of this page for a quick call back.