USDA loans are a fantastic way to purchase a home with no money down and 100$ financing. They allow low and moderate income borrowers to purchase modestly priced housing for their own as their primary residence.
USDA loans have a funding fee much like VA loans which can rolled into the mortgage. FHA loans have an upfront morgage insurance premium of 1% but they also have a montly insurance premium which is 1.15% of the loan amount. Conventional loans also require at least 5% down and monthly mortgage insurance.
With USDA you can buy a home with NO MONEY DOWN and have lower monthly morgage payments than with a FHA loan with a 3.5% down payment. Please look at sample loan comparison chart I have provided below and you will see the difference between a Convential mortgage, a FHA mortgage and a USDA mortgage. I am doing this loan comparison on purchasing a home for $100,000.00.
LOAN TYPE CONV. 30 YR FIXED FHA 30 YR FIXED USDA 30 YR FIXED
DOWN PAYMENT 5% 3.5% 0%
LOAN AMOUNT $95,000 $96,500 $100,000
INTEREST RATE 3.941% 3.656% 3.750%
EST. APR 5.063 % 4.499% 3.913%
ESTIMATED MONTHLY PAYMENT
PRINCIPAL & INTEREST $450.32 $446.19 $472.38
MONTHLY MORTGAGE INS. $53.04 $91.69 $0.00
ANNUAL PREMIUM(monthly) $24.79
TOTAL $503.36 $533.88 $497.17
Payments do not reflect property taxes or insurance.
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