FHA or USDA

[Anonymous]

I have been preapproved for an FHA loan.  We are in the process of looking for a house.  I have noticed a lot of talk about a USDA load and went to the web site to confirm my income requirements and it showed us as eligible.  

The only difference in the two is USDA is 100% financing correct other than that there the same?  Is it better to get approved for both and then compare once I am ready to set down and have our house that we want?   At this time I do not have the 3.5% down for FHA but I am working on it.  

[Anonymous]

The property you're looking at has to be in a USDA rural area.

You can put the address in on their site and it will tell you if it's in an eligible area.

http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

[Anonymous]

I checked and we have three different property's we like and they quailfy. 

I called our broker and she said USDA was much more to it that a FHA loan.  I just want to be sure I have all of my options availble when we find the house we want.  Just want to get the best deal we can. 

[Anonymous]

Our broker said USDA is a great deal if you can do that. We can't seem to find many houses that would work for us though. I read you can finance 102% of the purchase price with USDA. Is that right? And the no PMI is awesome.

I think it's actually a lot more work for your lender. But it's such a great deal!

[Anonymous]

Nothing down

No monthly PMI

There is a 2% funding fee.

You can finance up to 102% of the apprasial which means that if there is a difference between the sales cost and appraisal you can finance closing

I understand that credit requriements are a bit tighter than FHA but not as tight as conventional.

The property has to be in a qualified area.

Your income has to qualify.

[Anonymous]

You can finance 102% because they allow/expect you to finance the 2% funding fee.

USDA can be more flexible than FHA, actually. We're two years from a BK7 discharge, but our house (which we included in the BK) wasn't sold through foreclosure until 15 months ago (even though the BK & foreclosure actually started 3½ years ago.) We've re-established credit, with no derogs since the BK. FHA insists on 3 years from the foreclosure sale date and I can't find anyone to make an exception even though we've been renting for over 3 years and it was the bank that delayed the sale, not us. USDA will let us buy now.