USDA Loans – Encouraging Developments
ByUSDA Loans- Encouraging Developments
Last Friday morning, 4/23/10, a new bill named HR 5017 passed through the House Financial Services Commitee. This bill essentially replenishes the supply of funds to the USDA Rural Develpment loan program and even better, it makes it self-sustaining and not reliant on taxpayer dollars for continuation. Next the bill will next go to a vote in the House. The program had been essentially estimated to run completely out of funds by April 30, so the timing could not have been better.
The USDA program will likely carry some changes such as an potential increase in its Guarantee Fee from its current level of 2%, to 4% (Guarantee fees are financed into the loan amount, so the cost is spread out over 30 years). USDA loans may also start including a monthly mortgage insurance payment, so they will begin to be more in line with the FHA loan program. It would only makes sense, given that FHA has recently increased their upfront funding fee from 1.75% to 2.25% at the beginning of April. Regardless, the USDA loan will still be one of the best ways to purchase a rural eligible home with no down payment. For more information on USDA loans, please check out these articles.
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