The only real no money down loan available on the market today, USDA rural home loans provide a much needed funding stream for people who can’t afford the usual down payment on a mortgage. Congress has made some changes to the USDA Rural Development program recently, including some that directly affect the Single Family Housing Guaranteed Loans Program, which is the primary program that makes loans available for the purchase of rural homes.
The updated 2012 USDA Rural Home Loan Guidelines have introduced some changes to the program that will take effect on October 1, 2012. The most important of these is that the program will now be self-funded and will no longer rely on tax dollars for continued solvency. USDA rural home loans have historically been funded by the federal government, but with the new restructuring the future of the USDA’s rural loan programs are no longer dependent on Congressional allocations, insuring that these loans will be available for years to come and play an important role in the development and sustainability of our rural communities.
Due to the change in their funding model, the USDA has made adjustments to insurance rates on their guaranteed rural home loans.
Effective October 1, 2012, USDA mortgage insurance rates are:
- 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.
This would work out to a $2,000 upfront fee paid at closing, plus approximately $33.00 a month on a $100,000 rural loan.