USDA fees increasing for 2013 effective October 1, 2012

Beginning October 1, 2012, USDA will be increasing their guarantee fee and annual fee.  USDA’s guarantee fee is much like a VA funding fee or FHA upfront mortgage insurance premium: it is a lump sum that is most often financed into the loan. The annual fee, like FHA, is paid monthly as part of the mortgage payment.

The guarantee fee for purchases will remain at 2% of the loan amount. For refinances, the guarantee fee will increase from 1.5% to 2%.

The annual fee for both refinances and purchases will increase from 0.3% of the base loan amount to 0.4% effective October 1, 2012.

USDA mortgages offer zero down financing for borrowers who meet income limits and properties in designated rural areas.

NOTE: The photo in this post reflects eligible rural areas for 100% financing using a USDA zero down mortgage. If the property is not located in an orange (or peach?) shaded area, it may be eligible to purchase with a zero down mortgage.

VA Loan Limits from August 6, 2012 to December 31, 2012

VA has issued Circular 26-12-7 increasing loan limits for VA loans closed through the end of the year in the following Washington state counties:

King, Pierce and Snohomish: $498,750

San Juan: $470,000

All other counties remain at $417,000

This means that in King County, a qualified Veteran can finance a home with zero down with a sales price up to $498,750.  With that said, some lenders are still reviewing this recent change and are evaluating whether or not they will recognize the new increase or keep loan limits are their current level. 

Any sales price/loan amount above this amount is considered a “VA Jumbo”.  VA does not have a loan limit for VA jumbos, however most lenders have “overlays” limiting loan amounts for VA Jumbos.  VA Jumbos allow the Vet to buy a home with reduced down payment. A simple formula to estimate the minimum down payment required is sales price minus loan amount x 25% = minimum down payment.

Right now, as of publishing this post, I’m quoting 3.375% for a sales price of $400,000 (apr 3.557) with zero down payment. The seller can pay closing cost and prepaids up to 4% of the sales price. There is no mortgage insurance, however VA loans do have a funding fee which can be financed.

If you are selling a home, please consider buyers who are preapproved for VA financing. It’s a great program benefiting those who have served our country.