If you are a loan borrower who is making a down payment that is less than 20 percent of the purchase price of the property or home you are buying then mortgage insurance is something you will have to pay.
The main reason behind paying mortgage insurance is that it lowers the risk to the lender of making a loan to you. Mortgage insurance is beneficial to the borrower as well because it allows him or her to qualify for a loan that he may not be able to afford otherwise in a different scenario. However, this type of insurance usually will make the cost of your mortgage more as it will be included in your total monthly payment to your lender or your costs at closing and in some cases both.
What are the Premiums for a USDA Mortgage Insurance?
In a USDA loan mortgage insurance is compulsory no matter what your down payment is. The reason behind this is the fact that a typical USDA mortgage does not require a down payment from the borrower which makes USDA mortgage insurance a necessity.
A typical USDA mortgage is made up of two parts
- The funding fee or Guarantee fee
- Monthly mortgage insurance premium
For a 30 year loan term the funding fee is a standard 2% of the amount of the financed loan. As for the monthly mortgage insurance premium, currently it is 0.50% of the loan amount financed into the monthly payment of the borrower.
Getting Qualified for a USDA Mortgage
USDA home loan are a blessing for low income families with very flexible eligibility requirements. However, qualifying for this loan without expert advice can be a bit tricky. Email us or speak with one of our USDA Mortgage experts today at 877-342-7449