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USDAPMI
USDA Guarantee Fees
USDA Guaranteed mortgage loans include a one-time guarantee fee at inception and an annual mortgage insurance premium that is paid monthly as part of your USDA loan payment.
1. USDA Guarantee Fee
The USDA Guarantee Fee is similar to Upfront Mortgage Insurance Premium found on FHA loans. It is 1% of the USDA loan amount plus 1% of the fee, which is essentially 1.01% of the loan amount. Consider the following:
- You are buying a $400,000 home with no down payment.
- Your BASE USDA loan amount is $400,000.
- USDA Guarantee Fee is $400,000 * 1.01% = $,4040
- Therefore, your USDA loan amount will be $400,000 + $4,040 = $404,040.
The USDA Guarantee Fee is financed into your USDA loan.
2. Annual Mortgage Insurance Premium (USDA MIP)
USDA MIP is calculated annually, but you pay it monthly as part of your USDA mortgage payment. The USDA MIP rate is 0.35%. Consider the following from our Guarantee example:
- USDA MIP rate is 0.35%.
- Converting annual USDA MIP to monthly is done by multiplying the annual rate times the average principal balance over the next 12 months, backing out the Guarantee Fee, and dividing the annual premium by 12. That's the complicated part.
- The end result is an USDA MIP payment of appoximately $117.
- Calculate a USDA loan payment.