How do the benefits of a USDA home loan compare to FHA loans for first-time homebuyers?

Welcome back everyone sean stephens here again with metroplex mortgage services and another usda loan pro video quick tip so what are the key differences between a usda and an fha loan now this is an extremely common question i receive in today’s video i will compare usda and fha loans side by side and show you the facts and if you’ve not yet done so please feel free

To our newest usda blueprint for success with the link below this educational resource is designed to help walk you through the usda process step by step and is designed for both realtors and home buyers alike as a starting point although usda and fha loans are both thought of as first-time homebuyer programs there are key differences between the two loan options

First off down payment usda loans offer 100 financing which does not require a down payment on the other hand an fha loan requires a minimum down payment of three and a half percent of the purchase price so on a sales price 150 000 your minimum fha down payment would be 5250 compared to zero for a usda loan next we have closing cost closing costs will be applicable

On both usda and fha loans and even though a usda loan offers no down payment this should not be looked at as the same as no money out of pocket however a usd loan does allow for you to finance closing costs into the loan when the appraised value is higher than the contract sales price this can be an extremely attractive feature depending on the appraised value

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Which fha loans do not permit next up you have mortgage insurance when putting the minimum three and a half percent down payment for an fha loan it will require a monthly mortgage insurance premium of 0.85 percent of your loan amount for the full mortgage term otherwise known as life of the loan and also a one-time financed upfront mortgage insurance premium of

1.75 however while usd loan does not technically have mortgage insurance it still has what is called an annual fee that is calculated monthly within your payment and although this fee is for the life of the loan because it is only 0.35 percent this is over two times lower than the fha mortgage insurance premium additionally usda has a one-time finance guarantee

Fee of one percent which is also lower than the 1.75 percent fha finance mortgage insurance in summary since many banks and lenders do not specialize in usda loans we commonly see home buyers only offered fha or even conventional programs i founded metroplex mortgage services way back in 2001 and on top of being a top-ranked usda approved lender my team is known

For our overall government loan expertise in helping walk home buyers through the mortgage qualifying maze if you need help that is what we’re here for just call or email to discuss your scenario and let us show you the metroplex difference remember you can download our usda blueprint for success with the link below and as always i want everyone to make it a

Great day and look forward to seeing you right here for the next tip of the week

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Transcribed from video
How do the benefits of a USDA home loan compare to FHA loans for first-time homebuyers? By Metroplex Mortgage Services