USDA 3.50% Guarantee FeeDate: June 28, 2011
One of the most frequent questions that come up when discussing the USDA Loan program is the 3.50% fee that appears on the good faith estimate. USDA Loan are a "budget neutral" loan program offered through the U.S. Department of Agriculture. This means that the loan doesn't rely on U.S. tax payers for funding or assistance. Instead the program is self-funding through the 3.50% "Guarantee Fee" charged at the settlement table. This is a straight pass through fee from the lender to U.S. Department of Agriculture.
The 3.50% Guarantee Fee is calculated at a flat 3.50% of the loan amount when being paid upfront at settlement. If included or financed into the new loan then the calculation is based on the following formula: Loan Amount/.965 – Loan Amount, which is slightly higher than a straight 3.50% calculation.