Faithful74 Posted June 30, 2025 Posted June 30, 2025 Hello, I recently got pre-approved for FHA and USDA Loan and I'm not sure which one would be the best. It has been so long since I bought a home in 2008, and Shane is the one that actually helped me to purchase my first home. If anyone could tell me the pros and cons I would so much appreciate it Quote
Admin MarvBear Posted June 30, 2025 Admin Posted June 30, 2025 Welcome to our community here at Creditboards. Quote
liverichly Posted July 1, 2025 Posted July 1, 2025 Hey there! Your screenname sounds familiar but I can't quite put my finger on who you are. All things considered, if you qualify for both, then USDA will result in a little lower monthly payment than FHA will. The interest rates are the same, if not identical, but USDA has a 1% guarantee fee (can be financed) whereas FHA has a 1.75% upfront mortgage insurance premium (also can be financed), and USDA has an annual guarantee fee of .3% whereas FHA has an annual mortgage insurance premium of .55%. FHA allows you to buy anywhere, whereas with USDA you have to buy in rural areas that aren't too populated. Your loan officer may have already provided the website for you to check, but if not then it's https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do and click on "Single Family Housing Guaranteed", then "Accept", and then finally it'll bring up a map where you can enter in addresses or zoom in and look at the USDA eligible area boundaries. USDA does 100% financing whereas FHA requires a minimum of 3.5% down. With USDA, if the home appraises for higher than the purchase price, then you can increase your new loan amount and that difference is applied towards your closing costs. So, for example if you are buying a home for $250k and it appraises for $255k, and you have $10k of closing costs, then you can get a $255k loan amount to pay for $5k of the closing costs so you only have to pay the remaining $5k of the closing costs out of pocket. Those are the biggest differences between the two. Kat58 1 Quote
Faithful74 Posted July 14, 2025 Author Posted July 14, 2025 Thank you Shane you explained it perfectly for me to understand. Quote
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.