USDA Home Loans have PMI?

USDA loans are the coolest loans on the planet right now, and most people don’t understand that it has a form of mortgage insurance…

Mortgage Insurance does not pay your mortgage off when you die (well, maybe there’s a kind that does, but that’s not what I’m talking about).  The PMI-type mortgage insurance is default insurance. It covers a small portion to the bank if you default on the loan.

With Conventional loans, it’s referred to as Private Mortgage Insurance, or PMI.  This insurance generally cost @ .58%of the loan amount on a monthly basis (assuming you have 10% to put down and really good credit scores).

FHA has Mortgage Insurance Premium, or MIP, which is 1.75% of the loan amount PLUS a monthly amount of .55% of the loan amount (think it’s kinda’ expensive?).

VA has a Guarantee Fee. So if you are Veteran using your VA benefits the fee could be as much as 3%! (For details click here).

USDA Home Loans also have a form of default insurance (PMI), and it’s a Guarantee Fee. The actual dollar amount is a rather complicated formula, and it ends up being about 2.05% – but most people use 2.% as a rule of thumb for prequalifying purposes.

If you want more information about  USDA Home Loans in NC - please call Steve and Eleanor Thorne, 919-649-5058.  We are Mortgage Lenders in the Triangle that specialize in these types of mortgage loans.  Ask us about your Tax Credit! We have the lowest rates!

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