Question on USDA

[Anonymous]

I had been looking to go FHA a property I'm looking at states it can be financed USDA.  What are the benefits of this?  Are they less stringent than FHA?  I've emailed the most local office to get a list of lenders in the area.  I like the idea of 100% financing, it frees up negotiating on the front end of sales price.

[hawkeye33]

The benefits are many. I think they are pretty closely in line with FHA in terms of being stringent. Make sure you check out their website for income limits in your area, as well as property eligibility. I've read some posts here that they are pretty stringent on DTI ratio (I believe limit on back-end ratio is 41%).

USDA has an up front financing fee, but it can also be rolled into the loan (so I believe it is actually 102% financing). Unlike FHA, USDA loan has no required mortgage insurance.

I believe this may also be true of some, or all, FHA loans, but I know my USDA loan offers the ability to sell the home down the road and offer to a buyer with your terms (for example, if rates are 8% in 10 years, you could offer your home with 5% financing that you get today, provided that the buyer qualifies for USDA financing). That's pretty sweet.

I highly recommend USDA guaranteed loan program, especially if you're looking to do something with little up front money.

Good luck!

[rockymtngrl]

USDA is supposed to be the best program available if you can qualify. They used to be less stringent than FHA but as of the past 6 months or so they are very strict, definetly stricter than FHA on credit and DTI. They also don't make any exceptions-you either qualify or you don't, period. FHA will make exceptions on just about anything as long as it makes sence.