How the USDA annual guarantee fee is calculated, collected, and compared with FHA MIP. The 2 Mortgage Guys at Luminate Bank, lending nationwide.
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USDA Loans
Annual Fee
USDA does not use traditional PMI. Instead, Guaranteed loans charge an annual fee — currently about 0.35% of the outstanding balance — collected monthly with your payment. Ryan and Steve break out that line item so you see true PITIA before you shop.
One recurring charge — smaller than most FHA MIP — baked into your monthly housing payment.
Buyers often ask whether USDA is “free” after zero down. The annual fee is the main ongoing cost to understand.
On a $250,000 USDA loan balance at 0.35% annual:
Ryan and Steve make the annual fee visible early — so USDA vs FHA vs conventional is an honest monthly comparison, not a surprise after appraisal.
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Send Ryan & Steve your purchase price and county — we will model the 0.35% annual fee, compare USDA to FHA, and show the real monthly number before you shop.