Upfront USDA Guarantee Fee and Annual Fee Reduction
Great news for borrowers who are interested in living in smaller communities, or who have less money to spend on a down payment! USDA’s (United States Department of Agriculture) Rural Housing Loan is reducing the Upfront Guarantee and Annual fee for conditional commitments granted by USDA beginning, on October 1, 2016.
A little bit about USDA loans: USDA finances up to 100% of the sales price for homes in designated rural areas. This means that borrowers will not have to come up with a down payment, which could be beneficial for someone such as a first time home buyer. USDA does have geographic and income restrictions, so if you’d like to learn more, give us a call!
There is an Upfront Guarantee Fee charged on all government loans. Generally, this fee is financed into the loan. For conditional commitments granted on October 1, 2016, the Upfront Guarantee Fee on USDA loans will drop from 2.75% down to only 1.0% of the loan amount. The annual fee will also drop from 0.50% down to 0.35% of the unpaid principal balance for the life of the loan.
Example Guarantee Fee savings for a buyer purchasing a $200,000 home:
- Guarantee Fee was (2.75%): $5,500
- Guarantee Fee now (1.0%): $2,000
- Savings upfront: $3,500
The reduction will apply to purchase and refinancing transactions for the Single Family Housing Guarantee Loan Program loans and will stay in place until September 30, 2017.
If you have any questions about where a property qualifies for this program, please give PRM a call. We are always happy to answer your questions!Home Financing, home loan, home mortgage, homebuying, Mortgage, Mortgage Financing, Pacific Residential Mortgage, Real Estate, USDA, USDA home loan