USDA Home Loan – Program Fees

Guarantee fees can be divided into several different sections.

• Guarantee Fee:

  This fee needs to be paid at the time the guarantee is issued and is paid to the Rural Housing agency. This is a onetime upfront fee which is 2% of the loan amount, or a percentage of the guarantee which is given. For a refinance transactions a .5% upfront fees is required.

• Annual Guarantee Fee:

  Every year, a .3% annual fee must be paid for the life of the loan. This is typically included in your monthly payment. The fee depends on the loan amount and is paid for the upcoming year. Collection of this fee is done on the 1^st of January in every calendar year.

• Transfer fee:

  When you wish to transfer the property from one owner to another, this fee has to be paid. It is a flat charge of $1,250. These fees have to be paid to cover the administrative charges.

  USDA Lender Fees:

  Loans that are guaranteed under the Single Family Housing Guaranteed Loan Program (SFHGLP) can also include applicable loan fees that are set by the lender. While the lenders will determine how high to set the fees, they must not be excessively high. That is, the fees charged to the borrower should be comparable to the amounts that get charged to applicants for other, similar transactions. The fees on loans guaranteed by Rural Development will be expected to be similar to the fees on FHA and VA-backed loans.

  The lender may charge discount points, including credit score adjustments, loan size adjustments, and origination charges, but these cannot be included in the loan. Discount points that represent an interest rate reduction can be included in accordance with guidelines.

  If the Agency finds fees to be questionable, the Agency will ask for the lender’s justification to make sure they’re fair. Under RESPA regulations, lenders do not need to itemize loan origination fees on the Settlement Statement (HUD-1). However, charges can be itemized if the Agency asks for more detail on them. The Agency will review the HUD-1 when the loan closing package is submitted.

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