The USDA has announced significant cuts to both the up-front funding fee and the monthly mortgage insurance factor for loans that receive a conditional commitment from USDA on and after October 1st (when the 2017 fiscal year starts). These changes are as follows:
- Up-Front Funding Fee: Currently 2.75%, will be reduced to 1.00%.
- Monthly MI factor: Currently .50%, will be reduced to .35%.
Borrowers will be able to save roughly $20/month for every $100,000 borrowed - which will allow for the potential for them to look at a slightly higher price range, or simply a more affordable payment.
So as you are looking to get pre-qualified and are in the market for a Rural Housing loan, make sure to take these upcoming factors into consideration as they could have a significant impact for you.
One final thing - there will be NO changes to eligible areas when fiscal year 2017 begins!