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FHA vs. Rural Development - A Mortgage Battle

FHA vs Rural Development

Which loan program is better for the first time home buyer, FHA or Rural Development? Before we answer that question, let's look at what these programs are.

FHA mortgage loans 

FHA mortgage loans are actually federally-insured mortgages issued by a lender approved by the Federal Housing Administration. These loans have a low down payment (3.5%) requirement and generally have more liberal qualifications that cover first time home buyers. FHA loans also come with lower monthly insurance premiums and generally lower closing costs.

Rural Development Loans

Rural Development loans are backed by the USDA and have some similar lending guidelines to FHA. However, RD loans cover only properties deemed "rural" by the USDA. This covers many areas around bigger cities, not just "out in the country." Several smaller towns and villages fall under the RD loan umbrella. The bonus to RD loans is they cover up to 102% of the appraised value of the house.

So Who Wins the Fight?

When you're looking for the best deal and the best mortgage for your first home (or any home for that matter) you'll need to consider several factors. These wil include where the home is located, what kind of down payment you have available, what kind of mortgage insurance you want to pay and your income level. There's actually no overall winner between FHA and RD loans. The true winner is the home buyer. You have the opportunity to figure out which mortgage option you think works best, and then work with a mortgage professional to hone in on the best mortgage program for you. Download the free comparison "FHA vs RD" at the button below. It's a 1-sheet, side-by-side look at these programs so you can begin to understand all of your options.

 Compare FHA vs Rural Development  

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You've found a home in a neighborhood where you've always wanted to live. And you can snatch it up at a good price. So what's stopping you?   Could it be the outdated appliances, dark brown exterior,  and wall-to-wall carpeting? It might not be your dream home just yet, but with an FHA 203(k) renovation loan, it could be. With this loan you can purchase the property and get the extra funds you need to remodel, repair, and renovate. It's unique because you can borrow the funds you'll need based on what your house is expected to be worth after the renovation is complete. 

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(photo: Styron Batchelor, third from left; Loan Officer Mark Bynum, third from right; Loan Officer Assistant Jeff Jones, second from right)

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