At AmeriSouth Mortgage Compay, we offer USDA loans in NC as well as FHA loans. Since these two programs are often viewed as being similar, you can imagine that the differences between the two are often skewed. Let’s line up these two loans side-by-side and let you be the judge which one comes out ahead. Remember, if you need help or have a question, that is what AmeriSouth is here for. Just call or email to discuss your scenario. We’ll respond within a business day if we miss you.
Not Only for First-Time Home Buyers
Although FHA and USDA loans are both thought of as first-time home buyer programs, they’re both also eligible for previous homeowners. Provided that it is a primary residence, this can be a great option for a buyer looking to sell and move up to another property. Remember, both FHA and USDA loans only allow for primary residences. This means no investment properties or second homes.
The Key Differences of USDA and FHA Loans
Let’s take a look at the following example to show you the key differences between FHA and USDA loans. Any figures in this example are dependant on the amount financed. For this scenario, we will use a $100,000 loan a 30-year term:
3.5% Down Payment
.85% monthly Mortgage Insurance Premium (MIP) = $70.83 monthly MIP payment
One time Financed Mortgage Insurance Premium which is able to be financed into your loan
One time Financed MIP: 1.75% = $1,750
NOT able to finance any out of pocket closing costs, regardless of what the home appraise is for
No Down Payment (100% financing)
.35% monthly premium = $29.17 monthly payment
One time Financed Guarantee Fee: 1% = $1,000
CAN finance closing costs
USDA loans allow for the ability to finance closing costs when the appraised value is higher than the contract sales price. Understanding the differences between USDA and FHA loans is important! Since many banks and lenders do not specialize in the USDA program, AmeriSouth Mortgage Company frequently sees home buyers offered only FHA or conventional loans. However, for most home buyers, USDA loans are the better option.
What Not to Do When Applying for USDA Loan
Do not pay off collections or charge-offs. As crazy as this may sound, updating activity on a negative account by paying off old collections can cause a drop in your credit score. Other factors go into this equation, so check with your mortgage professional before making any payments. We’re here round the clock to answer your questions.
Do not max out, overcharge, or access lines of credit on your existing credit accounts. Running up your credit card balances is one of the fastest ways to bring your score down! Once you begin the loan process, try to keep your credit cards well below the available credit limit at all times during your billing cycle. For more information regarding USDA loans in NC, contact AmeriSouth Mortgage Company right away!