USDA loans are a fantastic way to purchase a home with no money down and 100$ financing. They allow low and moderate income borrowers to purchase modestly priced housing for their own as their primary residence.
USDA loans have a funding fee much like VA loans which can rolled into the mortgage. FHA loans have an upfront morgage insurance premium of 1% but they also have a montly insurance premium which is 1.15% of the loan amount.
With USDA you can buy a home with NO MONEY DOWN and have lower monthly morgage payments than with a FHA loan with a 3.5% down payment. Please look at sample loan comparison chart I have provided below and you will see the difference between a Convential mortgage, a FHA mortgage and a USDA mortgage. I am doing this loan comparison on purchasing a home for $100,000.00
LOAN TYPE CONV. 30 YR FIXED FHA 30 YR FIXED USDA 30 YR FIXED
DOWN PAYMENT 20% 3.5% 0%
LOAN AMOUNT $80,000 $96,500 $103,500
INTEREST RATE 4.50% 4.50% 4.50%
APR 4.858 % 5.579% 4.814%
LOAN TERM 30 YEARS 30 YEARS 30 YEARS
ESTIMATED MONTHLY PAYMENT
PRINCIPAL & INTEREST $405.35 $493.84 $ 524.42
PROPERTY TAXES $100.00 $100.00 $100.00
HAZARD INS. PREMIUM $100.00 $100.00 $100.00
MORTGAGE INS. PREMIUM $0 $91.80 $0
EST. TOTAL MONTHLY PAYMENT $605.35 $785.64 $724.42