What is the USDA loan guarantee fee, and can it be financed into the loan?

What is the USDA loan guarantee fee, and can it be financed into the loan?

• A. 1%, Yes it can be financed
• B. 0%, Yes it can be financed
• C. 1%, No it cannot be financed
• D. 2%, No it cannot be financed

Answer: (A)

The upfront USDA loan guarantee fee is 1% of the loan amount. This fee can be financed into the loan, so you don’t have to pay it in cash at closing. Financing it increases the loan balance and, consequently, the monthly payments. (There is also an ongoing annual fee of 0.35% of the outstanding balance, paid monthly, but that is separate from the upfront financing option.)

The upfront USDA loan guarantee fee is 1% of the loan amount. This fee can be financed into the loan, so you don’t have to pay it in cash at closing. Financing it increases the loan balance and, consequently, the monthly payments. (There is also an ongoing annual fee of 0.35% of the outstanding balance, paid monthly, but that is separate from the upfront financing option.)