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Profile picture for FamilyCircle

Is it easier to qualify for Direct or Guaranteed USDA Loan?

If our income will allow us to go either way. I dont see anyone promoting going the direct loan route...is it because its not through a lender its not promoted so theres no commission? or is their a drawback?

I would like to know if the qualifying process is faster? is it easier to qualify? fund? close? etc?  better rates either way?
  • February 20 2010 - Winchester
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Answers (6)

For the Direct program you must go directly to a USDA office and apply.  Yes the rates can be lower than the Guarantee Program.  Talking with the USDA office here in CA, they will "taylor" the loan program (fixed rates as low as 3.5%) to fit your needs.  It is only for "low income" though, 80% of the median.  You will need to find out about the turn times for your local office.

The loan funds come directly from USDA though, unlike the Guarantee Program.  So if USDA currently is out of funds for the program, then you will need to wait until it is funded again.

Hope this helps.

  • February 22 2010
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Profile picture for Justin Kennedy
it is a 2% fee financed/no monthly MIP
 The GHS is great, I have closed many in the last few months. I expect to close many more as FHA raises the UFMIP to 2.25% and MIP as well. work with an RE agent an loan officer that know this programs in's and out's. depending on the time frame at USDA for thier 2nd signature, a 30 day contract can go very fast.  plus, the property criteria can be trickly as well.
  • February 22 2010
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Profile picture for FamilyCircle
pmi calculators show $163 a month for CA... for 80 months ? plus we plan to stay 15 yrs or more. we have moved 6 times in 5 yrs with 4 kids. no more.!
  • February 22 2010
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Profile picture for Land Answers LLC
You are right they do wrap it......but 3% can be alot.  On a 200k mortgage that is 6k.  PMI is normally around $70 a month.  For the 3% upfront to be worth it you need to keep the loan for at least 85 months.

I'm just saying, its not a big deal at all if you plan to live there a long time.  Of course you are also paying interest on that 3% that is rolled into your cost.
  • February 21 2010
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Profile picture for FamilyCircle
I thought they wrapped the 3% into the loan? no money down at all I was told.
  • February 20 2010
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Profile picture for Land Answers LLC
I did the USDA loan recently.....very quick and easy process.  I have done conventional mortages that were a nightmare.  Only real drawback is because you do not pay any PMI in monthly amounts they hit you with like 3% up front.  

  • February 20 2010
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