The U.S. Department of Agriculture offers a variety of programs to help low to moderate-income individuals living in small towns or rural areas achieve home ownership. The Rural Housing Service (RHS) helps qualifying applicants, who may not receive credit from other sources, purchase modestly priced homes as their primary residence.
RHS Loans are an attractive option because:
- Minimal closing cost
- 30 year fixed rates
- No money down required
- Seller may pay up to 6% of the purchase price toward buyers costs
- Lenient credit guidelines
The property must be in an eligible rural area. You can see the map and run a property address by clicking HERE
There are also housing income restrictions and limits on this program. The income limit and calculation is determined by the total number of people in the household, including all income (even those who are not a borrower on the loan). To see the Guaranteed Housing Program Income Limits (under the Mod. Inc.-Guar Loan section) click HERE
USDA Guarantee Fee Stays Low for 2018 to Help Home Buyers
Homebuyers received great news about the USDA Rural Development guaranteed loan program! In 2017, USDA drastically reduced the guarantee or funding fee they charge upfront on USDA loans, plus lowered the annual fee also. So the great news is that the USDA guarantee fee 2018 (also often referred to as a USDA funding fee) will remain at the low 1% financed amount! Additionally the annual fee will remain at .35% which is much lower than FHA’s standard 30 year rate of .85%. The USDA fiscal year stretches from October 1, 2017 – September 30, 2018, so these fees will be effective until 9/30/2018.
USDA Guarantee Fee 2018
First of all, what is a guarantee fee and why should you even care about it? Guarantee and funding fees are paid directly to lending agencies like VA, FHA, or in this case, USDA. Government loans like these require lenders to collect these fees at closing in order to use the programs. This guarantee fee actually helps pay for the lending agencies and programs to exist. Therefore the result is these great lending programs, which offer low to no down payments, are made available to borrowers.
Luckily for USDA buyers, the USDA guarantee fee 2018 is the lowest of the government loans (except disabled Veterans who are exempt from the VA funding fee). Additionally, the USDA guarantee fee is financed on top of the base loan amount. So the borrower doesn’t have to bring this fee to closing. Unless of course the buyer wants to. Overall, this means a lower payment and less money brought to the closing table!
USDA Annual Fee 2018
In addition to the upfront guarantee or funding fee, the USDA annual fee is also going to stay the same as 2017. This amount is .35% of the total loan amount. First of all, a common misconception is that this fee is collected once per year from the borrower. This is not the case. It just means that the monthly figure added to the payment is based on the new loan balance at each anniversary date times the .35% divided by 12 months.
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