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USDA Rural Development Reducing Fees Make Home Loans More Affordable

Vicki Schurman
Release Date

Effective October 1, 2016, USDA Rural Development announced that fees for mortgage loans originated for the Guarantee Rural Housing Program (GRH) were reduced from 2.75% upfront fee down to a 1% fee.  The monthly mortgage insurance premium was also reduced from .50% to .35%.  The reduced fees are among the lowest fees offered for federal mortgage loan products that offer low down payments.  For example, the Federal Housing Administration (FHA) Program has an upfront fee of 1.75% and monthly mortgage premium of .85%.

The reduction in these fees will make home loans more affordable.  For example through the GRH program, a $100,000 loan with the lower fees would reduce the upfront fee by over $1,800 and would lower monthly mortgage insurance premiums resulting in a $22 reduction in monthly payments.

With GRH financing, private lending institutions provide the loans which are guaranteed by the federal government.  The program features no down payment to eligible income households and no maximum mortgage limits.  In FY 2016, 78 approved lenders participated in the GRH program in Nebraska and provided more than $97 million to assist 948 rural Nebraska households in achieving homeownership. 

To be eligible, the property purchased by families must be located in a rural community or area.  All communities in Nebraska are eligible for USDA housing programs with the exceptions of Fremont, Grand Island, Hastings, Kearney, Lincoln, North Platte, Omaha and South Sioux City/Dakota City.  Applicants for home loans may have a household income of up to 115% of the median income for the area.  For example, for many counties in the state, a 1-4 person household can have an income up to $75,650 and 5-8 person households up to $99,850.  Income limits are higher in some counties.  See  http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do for eligible areas and all income limits by county. 

Visit: http://www.rd.usda.gov/programs-services/single-family-housing-guaranteed-loan-program/ne for information on the GRH program.

Visit:  http://www.rd.usda.gov/programs-services/single-family-housing-guaranteed-loan-program/ne to find the Nebraska office nearest you.

President Obama’s plan for rural America has brought about historic investment and resulted in stronger rural communities. Under the President’s leadership, these investments in housing, community facilities, businesses and infrastructure have empowered rural America to continue leading the way – strengthening America’s economy, small towns and rural communities. USDA’s investments in rural communities support the rural way of life that stands as the backbone of our American values.