USDA mortgage loans are so popular (especially in Georgia Florida and Alabama) because they allow first time or subsequent homebuyers to purchase a primary residence with no money down and with low monthly payments.
The USDA National Office just announced on June 16, 2015 that effective with guaranteed loan obligations on or after October 1, 2015 through September 30, 2016, the up-front USDA guarantee fee is increasing from 2.0% to 2.75%.
This USDA up-front fee is financed on top of the base loan size just as it is done for VA and FHA loans so the change does not require the buyer to bring additional money to closing but it will make their payment a few dollars more per month. The Annual Fee will remain at .50% which is factored into the monthly payment. If you are looking to purchase soon & would use a USDA loan, let’s get the USDA commitment prior to October 1! Learn how the USDA Annual Fee is a little different from traditional PMI here.
The Up-Front USDA guarantee fee increase does also apply to USDA Streamline or Pilot Refinances.
The official USDA Rural Development unnumbered letter dated 6/16/2015 “Upfront Guarantee Fee and Annual Fee Schedule Effective October 1, 2015″ can be read here and is available under “June 2015″ on this page. Keep in mind that a loan is obligated when the mortgage lender has fully underwritten the file, USDA has approved a complete loan package, and USDA has issued form RD 3555-18 which is the “Conditional Commitment for Single Family Housing Loan Guarantee” to the lender.