The USDA Rural Housing mortgage plays a huge role in the Cache Valley real estate market, party because there are so many areas that qualify, but also because it is an excellent loan program with some big advantages for home buyers. See…Rural Housing Map for Cache Valley, Utah.
First, let’s talk about some of the advantages. The biggest advantage is the fact that Rural Housing does not require an annual mortgage insurance premium like other programs such as FHA and conventional. This is a huge advantage because it means that your monthly payments will be much lower than that of FHA or conventional (assuming same loan amount and a down payment less than 20%).
Another big advantage to USDA is that it doesn’t require a down payment unlike FHA which requires a minimum down payment of 3.5% and conventional which requires at least 5% down.
These are two advantages that FHA doesn’t have. It begs the question…”Is FHA or USDA Rural Housing the better loan?” Let’s look at the biggest disadvantage of the Rural Housing loan.
One Big Disadvantage: The biggest disadvantage of USDA is the upfront cost which is much higher than FHA or Conventional. USDA requires an upfront funding fee of 3.5%. It can be financed into the loan but this means that you are starting your home ownership experience underwater by 3.5%.
I have done the math and it turns out that if you are planning on staying in the home for longer than 2 years it makes more sense to use the USDA loan vs. FHA or Conventional. And in all reality, if you aren’t planning on staying in a home for more than 2 years, you probably shouldn’t be buying a home.
There are dozens of cities in Cache Valley that qualify for the USDA home loan. Some of those cities are…
- Most of Hyde Park
- Parts of Millville
There is a Rural Housing map where you can see the general area that does and does not qualify or you can go to the Rural Housing website and type in an address to type in a specific address to see if it qualifies.
As always, feel free to give me a call at 435-770-2709 if you have any questions about the USDA Rural Housing home loan, or any other mortgage program for that matter.