is USDA/Rural Housing the better buy (than FHA)???

By
Mortgage and Lending with Fairway Independent Mortgage Company 385907

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

 

Veeeeery interesting!

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

 

 

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Rainmaker
386,386
Dan Hopper
Keller Williams Realty Downtown LLC - Denver, CO
Denver Realtor / Author / Advocate/Short Sale

Jay, thanks for the breakdown of the two products!  We have the opportunity to work USDA in certain areas, as well.  I would certainliny go with that product, and again ... depending on the income scenario!

Jun 27, 2013 08:20 AM #1
Rainer
162,575
Alan Harris
Keller Williams Realty - San Diego, CA
San Diego Real Estate Broker with Keller Williams

Hello Jay,

Thank you for sharing this very informative post. Have a great day!

Jun 27, 2013 11:28 AM #2
Rainmaker
275,477
Jay Beckingham
Fairway Independent Mortgage Company - Delray Beach, FL
"I love first time homebuyers"

Dan

I'm a numbers guy and I found these to be pretty interesting. No down payment and a lower PITI, that's something to consider.

 

Alan,

you're welcome.

thanks guys

jay

Jun 27, 2013 09:14 PM #3
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Rainmaker
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Jay Beckingham

"I love first time homebuyers"
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