The United States Department of Agriculture (USDA) has recently announced that it is lowering the monthly fees and the upfront costs for its home loans. These lower fees will go into effect on October 1, 2016. Many first-time homebuyers make use of these USDA home loans because they require no down payment and have lower mortgage insurance fees that FHA mortgages. These changes to the fee structure will make USDA mortgages the second-most affordable in the country behind the VA home loans. VA loans, however, are only available to veterans, while USDA mortgages will be available to any who qualify.
The USDA home loan program was designed to help those who want to live in rural areas be able to purchase a home with less financial stress. While most think "rural" means living outside of a city, the USDA definition is not that strict. Many suburban properties actually qualify for a USDA loan, and in many cases, only homes in a major metro area do not fit the guidelines.
These loans cover all of the down payment and closing costs, two of the main financial reasons people cannot afford to buy a home. Having a high credit score is not required to qualify; indeed, those with scores of 640 or more can qualify.
The new fees will see the upfront costs drop from 2.75 percent to 1.0 percent, while the monthly fee will change from 0.50 percent to 0.35 percent.
Moneytips can help you refinance your existing home loan.