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USDA’s Upfront and Annual Fees are Decreasing

On August 23, 2016, the USDA Rural Development Program announced changes to their fee structure.  The first day of the 2017 Fiscal Year, October 1, marks the day when the interest rates will decrease.  The Upfront Guarantee Fee will decrease from 2.75% to 1%, and the Annual Fee will decrease from .5% to.35%.

What is the USDA Loan?

Interest Rates are down

USDA loans are no money down and offer below-market rates to eligible suburban and rural home-buyers and also include reduced premiums on mortgage insurance.  These loans are part of the USDA Rural Development Guaranteed Housing Program and are backed by the U.S. Department of Agriculture.

These loans can be used to rehab an existing dwelling, they can be used to purchase an existing dwelling and they can be used to build a new dwelling.

Eligibility

Only 3% of the country is ineligible but in Massachusetts that percentage is much higher due to the fact that we have more urban areas.  In the image below the areas shaded are ineligible for this type of loan but the unshaded areas are eligible.

Ineligible areas shaded orange

Ineligible areas shaded orange

The home must be located in what the USDA deems loosely as “rural” – small towns, and suburbs included.  Eligibility can be determined by providing the home address to the USDA website.

There are additional eligibility requirements which include but are not limited to, income requirements, must have legal ability to incur a loan obligation, eligible credit rating, and the property specific requirements which make the property eligible.

How to get more information

Applicants should get in touch with an approved lender.  You can find out more here: http://www.lamacchiarealty.com/types-of-mortgage-loans/usda-loans/

USDA