Saturday, February 5, 2011

Kentucky USDA/Rural Housing Loans VS Kentucky FHA Loans

Kentucky USDA/Rural Housing Loans VS Kentucky FHA Loans



There are very few ways to purchase a home these days without a typical 3.5% down payment that is required for an FHA loan. Many home buyers are surprised to find that a USDA Home Loan offers a lower payment than an FHA loan, even with NO DOWN PAYMENT! “How can this be?” you ask. The reason is because a USDA home loan requires NO MORTGAGE INSURANCE.



FHA Loan vs. USDA Loan


FHA USDA





$150,000 purchase price $150,000 purchase price



4.75% 30 year fixed rate 4.75% fixed rate



1.00% up front mortgage insurance (financed) 3.5% Guarantee Fee (financed)

****new FHA mortgage insurance requirements effective 10/4/10

$871.19 P&I monthly payment

with monthly mortgage insurance (not including taxes and insurance) $809.86 P&I monthly payment (not including taxes and insurance



$5250.00 required down payment $0 down payment





A USDA loan saved this client $46.74 per month and they made NO DOWN PAYMENT!



Other benefits of USDA Home Loans


Low up front closing costs


In some cases closing costs can be financed


Minor credit problems OK


No maximum loan amounts


Fixed Rates Only

We strive to find anyway possible to approve your loan, however there are some cases where a USDA Loan is not an option; a previous bankruptcy must be discharged 3 years, you must occupy the home being purchased as your primary residence, the home may not be used for income producing purposes (farm, rental, etc.), streets and roads must be paved or have an all-weather surface and the home may not be located in a flood zone. There may be other factors in preventing your loan application from being approved, however these are the most common. If you have a question on determining your eligibility, don’t hesitate to contact us. Never assume you don’t qualify without speaking to a loan officer first!

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