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USDA and FHA Loans

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Mortgage and Lending with Leader One Financial 164545

USDA and FHA Loans

Many borrowers I speak to are confused about the similarities and differences between USDA and FHA loans.  The largest similarity is that both programs are insured by the federal government, which means that they are more available and often have attractive program options for first time homebuyers.  However, in many ways the USDA Loan Program is a more beneficial program buyers who qualify, and here’s two big reasons why:

The USDA Loan Program offers 100% financing to qualified buyers, while FHA will require a down payment of at least 3.5%.  That’s a potential $3,500 savings on a $100,000 purchase, just by switching to USDA!

  • Closing costs can be financed in to USDA LoansUSDA and FHA Loans. When you’re buying a home there are several out of pocket expenses which fall in to two categories: down payment and closing costs.  As I mentioned, the USDA Loan Program has a unique no down payment option,(also called 100% financing,) but is also the only loan program on the market that will allow you to finance up to the appraised value of the home.  In today’s market, it is common for homes to sell for far less than their appraised value.  The USDA Loan Program allows borrowers to use the difference between the appraised value and the sales price to finance closing costs right in to the loan!

So when you’re looking to minimize down payments and closing costs, there is really no question that the USDA Loan Program is ahead of the pack.  If you’re wondering if a USDA Loan could be right for you, here are a few qualification requirements to consider:

  • For both USDA and FHA Loans you must have a good credit score.  If you don’t know your score, we will find that out in the pre-approval process, when you’re ready to purchase a home we are able to pull your credit and disclose your scores  at absolutely no cost to you.  If your scores do not meet the qualifying criteria, our staff will give you valuable information to help you improve your credit and be mortgage-ready for a follow-up in the future. To begin the pre-approval process click here.
  • USDA Loans are only available for properties located in “rural areas”. Now, before you urbanites go running for the hills, you should know that often USDA loans are available in places you may not expect. Check here for USDA property eligibility. Or give us a call, we’ll review your situation and help you determine is USDA is the loan program for you.
  • USDA Loans are only for primary residence purchases and refinances.  No second homes or investment properties. 
  • USDA Loans have a maximum household income cap for borrowers.  This cap is determined by county and considers the gross income of all income-earning persons who will be occupying the property. Click Here- for USDA income limits.

If you're still not sure about the USDA and FHA loans differences and would like more information or just to speak with a real person, you can call us at (816)268-4025 or you can get started by getting pre-approved online at KC Loan Tips.

USDA and FHA Loans

Posted by

Darren Copeland | Home Loans | Lee's Summit MODarren Copeland, Vice President LeaderOne Financial

4967-B NE Goodview Circle, Lees Summit, MO 64064

(816) 268-4025

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Comments (2)

Kela Caspillo
Kauai Dreams Realty - Kapaa, HI
Kela Caspillo

I love USDA loans! I live on the island of Kauai, Hawaii so our entire island qualifies for USDA. Many people still dont know that you could purchase a home with 0% down.

Feb 18, 2014 04:02 AM
Darren Copeland
Leader One Financial - Lee's Summit, MO
Darren Copeland

I agree Kela!  They are such great loans, yet no one seems to know about them.  So when are you inviting us to Hawaii to visit huh? ;)

Feb 19, 2014 02:17 AM