Effective October 1st, 2014, USDA is raising its annual guarantee fee from .4% to .5%. The annual fee is then divided by 12 for the monthly figure.
For example, on a $200,000 loan amount, the annual fee would be $200,000 x .5% or $1000, divided by 12, for a monthly amount of $83.33. This amount is paid monthly with the normal mortgage payment.
Compared with mortgage insurance on other low down payment mortgage options, the .5% is still very competitive, and it is still roughly 1/3 of the monthly mortgage insurance on FHA loans which are usually the next option borrowers choose if the USDA loan is not an option.
Baxter Scruggs is a mortgage banker offering USDA loans in California, NMLS #156370. He can be reached at firstname.lastname@example.org, or at 760-497-7705, or toll-free at 877-347-0004, ext. 226. Licensed by the California Department of Business Oversight under the California Residential Mortgage Lending Act. The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Terms and conditions apply, all loans subject to underwriter approval. Subject to change without notice. Guild Mortgage Company NMLS #3274