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How do USDA mortgage rates compare to FHA mortgage rates?

Are they more or less the same or does one program have notably lower rates? by JFletcher from Westminster, Colorado. Mar 11th 2013 Reply


William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,553 contributions

USDA rates are about .25% higher than FHA, however the mortgage insurance is much lower (FHA 1.25% vs. USDA .4%), so the net result will be a lower payment with USDA.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Mar 11th 2013
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Joe Metzler (JoeMetzler)
#2 ranked lender in Minnesota - 3,852 contributions

They are basically the same. If you are looking between the two, USDA kicks butt over FHA. USDA Rural Housing has NO Down payment, but better yet, the mortgage insurance is dramatically cheaper. On a $100,000 loan, USDA PMI is only $40 a month, while FHA PMI would be $125 a month. In MN or WI, get your USDA loan at www.MortgagesUnlimited.biz/USDA

Mar 12th 2013
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Abdi Mohammadian (mohammadian)
#864 ranked lender in California - 33 contributions

USDA and FHA loan programs are both federal government mortgage loans created to help borrowers with less than perfect credit scores and low down payments procure a mortgage. The United States Department of Agriculture underwrites the USDA mortgage loan program and the Federal Housing Administration underwrites the FHA mortgage loan program.

Mar 11th 2013
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Adam Itchkawich (AdamItchkawich)
#35 ranked lender in Nevada - 8 contributions

The are very close to the same rate. Mortgage insurance is less with USDA which will make the payment better.

Mar 11th 2013
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Adam Itchkawich (AdamItchkawich)
#35 ranked lender in Nevada - 8 contributions

The are about the same. USDA has lower mortgage insurance, so USDA is better.

Mar 11th 2013
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Kim Clancy (TheClancyGroup)
#56 ranked lender in Colorado - 9 contributions

Hello!USDA rates and FHA are comparable right now, you should have the same rate with each productWhat areas are you looking in regarding USDA? We are getting ready to lose several areas with USDA financingPlease email me if you'd like a list of the available finacing for USDAkclancy@pinnacle-mortgage.comThanksKim

Mar 11th 2013
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Peter Botros (PeterBotros)
#70 ranked lender in New York - 895 contributions

Very close rates but lower payment with USDA due to lower mortgage insurance

Mar 11th 2013
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Dennis Clark (DennisClark)
#8 ranked lender in Nebraska - 22 contributions

It isn't so much the rates that matter as it is the monthly payment. Quoting one of my lenders rates for a scenario where the purchase price is $150,000.00, we would get the following comparison between the programs. Be advised this is for the purpose of illustration and is not a rate quote or a solicitation for a loan. On the FHA, the borrower must have 3.5% of the purchase price in the game. It can come from gift funds but somehow they need to put $5,250.00 in the standard FHA deal. Under this scenario, the loan amount would be $147,283.12 and the principal and interest payment at 3.383% on a 30 year fixed rate loan would be $651.79. In addition, the monthly mortgage insurance would be $153.42 (MI factor of 1.25%) for a total payment of loan specific charges of $805.21.The USDA loan requires no money down. While the FHA loan has a 1.75% up front MI fee that is rolled into the loan, the USDA loan has a 2% funding fee that is rolled into the loan. Therefore, on a $150,000.00 purchase, the loan amount under the USDA loan program would be $153,000.00. Today's rate from the same lender who quoted the FHA rate above would be 3.750%. That would give a principal and interest payment of $708.57 on a 30 year fixed rated loan. The mortgage insurance factor on this USDA loan would be .3% or $38.25 per month. Therefore, your total payment of loan specific charges would be $746.82 per month.The USDA loan requires less money in the deal, zero, and has a lower monthly payment on a higher loan amount. Which is the best loan for a borrower depends on the situation but usually the USDA comes out ahead. If you have any questions or need more information, feel free to contact me at dennis@mortgageloansofamerica.com.Thanks,Dennis W ClarkFreedom Lending, LLCNMLS#13970http://www.mortgageloansofamerica.com402-333-5432

Mar 11th 2013
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Dave Metsker (DaveMetsker)
#37 ranked lender in Oregon - 2,317 contributions

USDA slightly higher rate, but no down payment.

Mar 11th 2013
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Mark Schmidt (markallenschmidt)
#47 ranked lender in Colorado - 21 contributions

Mr Fletcher, the USDA loan has some great features like, 100% financing, low MI rates and it qualifies for the MCC (Mortgage Credit Certificate) that is a credit you get on your annual taxes, in addition to the interest deduction, you can get a cash credit equal to a portion of the interest you pay. Real money you didn't pay in the first place. A very cool thing. FHA has a very high monthly mortgage insurance that adds about 1.25% to your actual annual percentage rate. If you get a rate of 3% and you pay Mortgage Insurance of 1.25% you rate is actually 4.25% The USDA doesn't do that. I don't think properties in Westminster qualify fore USDA you can look that up at the USDA site or let me know the address and I'll look it up for you. The rates for FHA and USDA are usually very close. But remember the real cost of that mortgage insurance. Hope that helps. Mark Allen Schmidt

Mar 11th 2013
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Sean Young (SeanYoung)
#2 ranked lender in Colorado - 1,112 contributions

USDA has lower mortgage insurance and FHA's mortgage insurance is increasing next month. However, the greatest part of a USDA loan is $0 down. You will need to make sure the property is eligible. You can check for yourself at http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfpGood luck and I usually tell people to contact a local loan officer to help them, and I just happen to be local. :) If you have any questions, just give me a call at 303-521-7169 or email at sean.young@novahomeloans.com

Mar 11th 2013
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