2016 USDA / Rural Development Changes!

HUGE Announcement!!!!

The USDA made some major improvements to the Single Family Housing Guaranteed Loan Program also know as a Rural Development loan. The upfront guarantee fee changed from 2.75% to 1% of the loan amount and the annual fee changed from .5% to .35% of the average scheduled unpaid principal balance for the life of the loan. What’s that mean????

Here is a 150,000 example:

	Old Program	New Program
Upfront Fee	$ 4,241.63	$ 1,515
Monthly Fee	$63.75	$43.84

Now the really cool thing is the RD loan program is once again in many cases much more attractive to home buyers than an FHA loan. Lets run a quick comparison.

FHA VS RD $150,000 price, assuming 4% interest rate, $200 for property taxes, & $80 for insurance

	FHA	Rural Development
Principle & Interest	$703.15	$723.36
Insurance	$80	$80
Taxes	$200	$200
Mortgage Ins. (PMI)	$101.71	$43.84
Total payment:	$1,084.86	$1,047.20
Down Payment Required	$5,250	$0
So RD saves $38 per month and is zero down!