USDA home loan closing costs? What can you expect?
We have received many questions lately regarding USDA financing and closing costs. Generally speaking, for a new home purchase in Florida the buyer can expect to pay 3 -6% ( of the purchase price) for closing costs and pre –paid escrow requirements. Generally speaking in Florida, the seller will have “customary” closing costs that they are responsible for and the buyer will have the same. Again, these closing costs are “customary” and not set in stone.
One of the great benefits of a USDA mortgage is the flexibly it allows regarding closing costs. First, the sellers is permitted to give concessions ( pay for) the buyers closing costs up to 6%. These closing costs and escrows can be negotiated into your purchase contract and paid by the seller as part of the deal. In some cases this option may not be feasible with the seller. When this option is not possible, there is a second option as well.
The second option for closing costs involves including the costs, or rolling in the cost into your new loan. This option has nothing to do with the home seller. USDA will permit any pre approved buyer to roll in their closing costs if the homes appraised value supports the increase. Your new home must appraise high enough for this option to be used.
Home purchase price – $120,000
Closing costs and escrows to be paid by home buyer – $5,000
Appraised value - $126,000
In this example it would be ok to roll in all of your closing costs into the new loan, the home appraisal supports it. Your total loan amount would be $125,000 plus the 2% USDA guarantee fee.
Now you have your USDA contract fully approved and closing costs are taken care of as well. What else can the home buyer expect to pay? Generally you will be required to pay an escrow or earnest money deposit when you write your purchase contract. This amount is usually around $500- $1,000 depending on the sales price. This deposit money will be placed into a separate escrow account by the closing agent and applied. Appraisal and home inspection fees will also be paid in advance – these costs are generally $200 and $425.
Depending on the sellers concessions you negotiate, or the appraisal value, you can often receive the advance money you paid (deposit on contract, appraisal fee, home inspection fee) back at closing!
If you have questions about this topic or the USDA / Rural Development pre approval process, please contact USDA Mortgage Source at 904.302.6060 or visit our web site at www.UsdaMortgageSource.com
Serving you seven days a week, USDA Mortgage Source is Florida’s leading resource for all 100% USDA / Rural Development home loans. Fort Walton Beach , High Springs , Middleburg , Zephyrhills and everywhere in between – please visit our main web site at www.UsdaMortgageSource.com or call 904.302.6060 to learn more about the benefits of 100% USDA / Rural Development home loans here in Florida.
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