The USDA's guaranteed rural housing loans help low- to moderate-income families buy a suburban or rural home, often with no down payment. The property must qualify for the program and so must the buyer. The program requires payment of upfront funding fee, called a guarantee, as well as an annual fee, which is charged each year for the life of the loan. The upfront funding fee is currently set at 2 percent of the loan and the annual funding fee is currently .3 percent of the loan’s average annual unpaid principal balance. The upfront funding fee is typically built into the loan at closing and the annual fee is paid in monthly installments.
Determine the loan amount. If acquiring the loan using a no-down-payment option, the loan amount will be the purchase price of the property. If you are putting some amount down, subtract that value from the purchase price. For example, when putting $3,000 down on a property with a purchase price of $100,000, the loan amount will be $97,000.
Multiply the loan amount by .02 to calculate the upfront fee. For example, a loan amount of $100,000 will have an upfront fee of $2,000.
Choose whether to pay this upfront fee, or to add it to the loan and include it with your mortgage.
Use the amortization table that describes your loan to find the column that describes the monthly unpaid principal balance of your loan. It will have a title such as "Unpaid Principal Balance."
Locate on the amortization table the 12 monthly UPBs that apply to the year ahead. For example, if you have not begun to pay on your $100,000 loan, the first figure in the column would represent the unpaid loan balance: $100,000. The second figure in the column would represent the unpaid loan balance after the first payment -- perhaps $99,900.45. If you work your way down the column, the 12th figure would represent the unpaid loan balance after the 11th payment.
Add these 12 figures -- the 12 monthly UPBs you just located.
Divide this figure by 12 -- this represents the average annual UPB, the figure on which your payment will be based.
Multiply this figure by .003 to determine the annual payment. For example, $99,443.24 multiplied by .003 equals $298.33.
Divide this figure by 12 to determine the monthly installment payment. For example, $298.33 divided by 12 equals $24.86.
Items you will need
- Calculate the upfront funding fee for a refinance by multiplying the loan value by .015.
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