Okay let's get it out on the table.
USDA/Rural Housing isn't (just) about rural housing. Although it might be sometimes.
Rural Housing loans are available wherever the USDA feels they should be. So check out their site and look at one of the maps and/or punch in an address and see where you can use the program.
Now is it possible that USDA might just be a better buy than good olde traditional FHA?
Tell me now have you given this any thought?
In FHA's favor there's no limitation as to where you may buy a home, while with USDA there are going to be some restrictions, and USDA does have some income guidelines.
However, with USDA you can obtain 100%+ financing. FHA requires a 3.5% down payment
But with FHA if you want a pool, that's the way to go. USDA is not swimming pool friendly.
but what about the monthly payments?
well the FHA requires upfront MIP of 1.75% and an annual rate of 1.35%, but the USDA has a 2.00% guarantee fee up front, and an annual rate of (only).4%. That's a lot less.
Here's some quick numbers, for those of us who like this stuff.
purchase price $100,000
base mortgage; FHA $96,500 USDA $100,000
upfront MIP/guarantee $98,188 $102,000
P&I @ 5% $527.09 $547.56
annual MI $110.46 $34.00
payment w/o TI $581.56 $561.09
So, despite the fact that USDA is 100% financing, and FHA requires $3500 as a down payment, the USDA payment is less
does that make USDA better?
actually in my opinion, no, but it sure does mean that it should be considered.
the better buy?
whichever works the best for you