USDA Home 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 @ .68%of the loan amount on a monthly basis (assuming you have 10% to put down and really good credit scores).
USDA Home Loans also have a form of default insurance (PMI), and it’s a Guarantee Fee. The current USDA Loan PMI Rate is charged two different ways. First there’s an upfront premium, that most people add to their loan amount. The USDA PMI Rate 2015 for the upfront premium is 2%.
There’s also a monthly USDA PMI Fee charged. This is actually calculated on an annual basis at a rate of .5%. That amount is then divided by 12, and collected with the monthly payment.
Qualifying for a USDA Home Loan is fairly straightforward.
They are for owner Occupied properties only. This means that if you currently own a home, you will need to have proof that you can not commute due to a job change.
If you are going to rent out your current residence, you will need enough income to qualify for both payments without counting rental income (if it has not been previously rented) If there is at least a 12 months of history of collecting rent for the property, this No Money Down Home Loan program will allow you to count the income to qualify.
The home must be located within the USDA Home Loan footprint (Every County in NC currently has areas that qualify, Although there have been several changes in the past few years and more are expected in October of 2015
Each borrower needs at least 2 credit scores of at least 640. In general, the underwriters for USDA Home Loans in NC are looking for 12 months of Clean Credit.
You must be under the Maximum Income Requirements for the County you are purchasing a home in to qualify for this No Money Down Home Loan Program.
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 Raleigh Area that specialize in these types of mortgage loans.