Below we have outlined some of the main differences between the FHA and USDA Rural housing home loans.
1. The key difference – USDA is the last remaining 100% home loan available in Florida for non-military home buyers. FHA home loans require a minimum of 3.5% down payment.
2. USDA and FHA loans both require a one- time guarantee or funding fee that is included in the home buyers loan. The guarantee fee for USDA purchase loans is currently 2%. The FHA guarantee fee is 1.75%.
3. Both USDA and FHA mortgages require monthly mortgage insurance costs – most people know this term to be “PMI” or private mortgage insurance. However, with government loans, this is known as a monthly or annual fee. The monthly premium costs of USDA is cheaper than FHA… more than 70% less per month. However, the FHA monthly premium can be dropped or canceled once the homeowners loan reaches 78% loan to value. The USDA monthly mortgage insurance is paid throughout the life of the loan regardless of the future loan to value.
EDIT 2013: FHA mortgage insurance is now required to be paid for the life of the loan, just like USDA.
4. USDA has certain eligibility requirements that must be met in regards to household income and property location. Please read here for more details. FHA does not have this – property to be purchases can be located anywhere, income can be unlimited.
5. Both FHA and USDA Rural Development loans have nearly the same qualifying requirements in regards to credit, job history, etc.
All government loan programs are safe secure mortgages with fix rate terms and no pre payment penalty of any kind. The USDA and FHA government loan programs are especially good for Florida first time home buyers looking to purchase their first home with min money out of pocket. What loan is right for you depends on your location, income and other factors. Call us 7 days a week at 800-743-7556 and we would be happy to discuss what loan option fits your needs.
For more information on the Florida USDA loan please visit – www.UsdaMortgageSource.com
For more information on the Florida FHA loan please visit – www.FhaMortgageSource.com