Changes to conventional financing programs increased the cost to borrow money to buy a new home.Plus more families qualify because the income restrictions have been increased.
Why USDA Rates are Lower
One of the biggest benefits of a USDA mortgage is the payment advantage when compared to conventional and FHA financing.The interest rate on a conventional mortgage is driven by the credit score of the borrower and the down payment.Generally, an applicant with a credit score below 740 on a conventional loan will see an increase in their interest rate or the costs at settlement will be higher.If the applicant has a credit score below 680, the borrower would need to put down 20% to obtain conventional financing.Why?Mortgage Insurance companies are no longer willing to take the risk!Speaking of mortgage insurance, MI coverage is very costly, increasing the cost to borrow money when putting less than 20% down.
Both of these reasons lead to your payment advantage.USDA loans do not have credit score adjustments, nor do they have monthly mortgage insurance charges.
What a Lower Payment Can Do for You
A lower payment gives you a big advantage when shopping for a home.A payment advantage lower your monthly housing expense or allow you to purchase a larger home for the some monthly outlay.Most people are aware of how important the rate can be, but do not realize fully how significant the savings can be, both on the monthly payment as well as a cumulative savings over the life of the loan.
VA loans will typically have a lower monthly payment than a conventional or FHA loan even with no down payment invested using the USDA loan.
Monthly Savings
Loan
Amount
USDA
(0% Down)
FHA
(3.5% Down)
Conventional
(10% Down)
$150,000
$819
$857
$838
$200,000
$1092
$1142
$1118
$250,000
$1365
$1438
$1397
The monthly savings are significant, but if you were to carry that out over the life of the loan on a 30 year mortgage, the savings are incredible.
You also need to remember that you still have the lower payment even though you do not have a down payment required.What could you do with 5, 10 or $25,000 left in the bank when you buy your new home?
USDA loans allow you to borrow up to $350,000 with $0 down payment.
Take the next step and fill out our basic pre-approval form below.
Or you can always get in touch with an approved USDA Specialist. Click Here
No obligation and no SS# required.
It takes 2 minutes.
Get a complimentary copy of our homebuyer handbook upon completion.
Upon completion of the basic pre-approval form below you will not be obligated in any way,
nor will your credit report be pulled.You will be contacted by a USDA approved specialist
that will determine your eligibility for the program.
usdainfocenter.com is not a government owned website.
Envoy Mortgage 675 Berlin Turnpike Berlin, CT 06037
