USDA on October 1st added Monthly Mortgage Insurance to the monthly payment of a USDA Home Loan.  USDA has been a huge part of the Local Home Ownership recovery. The USDA loan has been huge in helping areas in Shasta County recover from the Housing Market.  Areas like Anderson, Cottonwood, Shasta Lake City, Bella Vista, Hayfork, Happy Valley, and other USDA eligble cities have all benefited from the USDA home loan. USDA has also helped First Time Home Buyers purchase a home when they thought it would never be possible.  Zero Down Payment with a very low monthly payment sounds really good to most 1st time buyers.  The reason the USDA loan has been so popular is because the loan offers Zero Down Payment with very low interest rates.  Also in the past the USDA loan did not have a monthly mortgage insurance like the FHA loan does.

WHY DID USDA ADD MONTHLY MORTGAGE INSURANCE

The reason USDA has added the monthly mortgage insurance is to help prevent loss from foreclosures and also to bring stability & longevity to the Government program so that borrowers can continue to benefit from the 100% financing loan.  If USDA did not add the monthly mortgage insurance, the program could be at risk of shutting down.  The government can not afford to offer a program that they consistantly lose money.  Recently FHA also increased its monthly mortgage insurance because of the same reasons.  The more FHA & USDA loans that go into foreclosure the more losses these programs face.  In order to prevent loss the government uses the Monthly Mortgage Insurance to offset their losses so that these loans can remain profitable

HOW MUCH IS THE USDA MONTHLY MORTGAGE INSURANCE

The new Monthly Mortgage Insurance is .3% of the loan amount divided by 12.  This payment is still significantly lower than the FHA Monthly Mortgage Insurance of 1.15% of the loan amount divided by 12.  The USDA loan is still a favorite if comparing the 2 loans side by side.  If the borrower is wanting to purchase a home inside of the city limits of Redding they would not have the choice of the USDA loan.  If the borrower is wanting to purchase in Redding the only option would be the FHA Loan or the VA loan if the borrower is a Veteran.