USDA Loans Require Mortgage Insurance
100%, no-money down mortgage financing.The Rural Housing Loan program is a product of the U.S. Department of Agriculture. It's partially funded by program borrowers. Similar to the Federal Housing Administration's FHA mortgage, the USDA uses homeowner-paid mortgage insurance premiums to keep the USDA home loan program going.
Since October 1, 2012, USDA mortgage insurance rates have been :
- For purchases, 2.00% upfront fee paid at closing, based on the loan size
- For refinances, 2.00% upfront fee paid at closing, based on the loan size
- For all loans, 0.40% annual fee, based on the remaining principal balance
USDA upfront mortgage insurance is not paid as cash. It's added to your loan balance for you.
USDA mortgage insurance rates are lower than those for a comparable FHA loans or conventional mortgages. FHA mortgage insurance premiums assess a 1.75% upfront mortgage insurance premium and charge as much as 1.55% in MIP annually. Conventional MI can be similarly high.
Even better, USDA mortgage rates are often the lowest among FHA mortgage rates, VA mortgage rates, and conventional loan mortgage rates.
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