USDA or FHA? Which loan is better? 

Time again and again we always get asked which loan is better? What are the differences between these two programs and which one is best for my situation?

First it's important to realize that both FHA and USDA are Government Home Loan Programs. This means that the Government insures or guarantees the mortgage.  This is a huge advantage when looking for a home loan. By the government guaranteeing the mortgage this means easier qualifications for you, less money out of pocket, low interest rates. Check with your lender to see if these loan programs are available in your city or state.  Most down payment assistance programs do have limited funding so please check and see what options are available.

Here are the facts:

USDA Loans:

  • If you have not already guessed the USDA loan is ideal for rural or semi-rural areas.
  • 100% financing. No down payment
  • No credit score or 620 credit score requirement
  • Can use rental history in lieu of credit
  • Can get cash back for repairs or Improvements
  • Income cap per the county
  • No purchase price limit
  • Small PMI payment

FHA Loans:

  • Eligible for rural and urban areas
  • Down Payment assistance for 640 or better credit score that are 1st time Home buyers and below the county income Cap. (Check with your lender on funding availability)
  • 3.5% down for credit scores below 640
  • Credit score down to 600 acceptable
  • Can get cash back for repairs or Improvements
  • No income cap
  • Loan cap usually around $271k
  • Can be used for mobile home, building a home
  • Hefty PMI payment

In summary, then I would say to each their own. USDA certainly offers more benefits; sometimes USDA will not work for some people’s situations or specific needs. If you can get a USDA I would opt for this first.

If you have more questions please contact us at 888-979-USDA (8732)
You can also apply now, click on the link below

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