The Big 3 Govie Loans: Comparing VA to FHA and USDA

The Big 3 Govie Loans: Comparing VA to FHA and USDA.

 

Table 3. Ginnie/USDA Highlights and Comparison to Ginnie/FHA

Program Attribute Ginnie/USDA Ginnie/FHA

Geography Includes 34% of U.S population.*

This is much higher than in other

definitions of “rural.”

1. About 16% of the

population live outside of

metro areas.

2. About 23% of the

population is classified as

rural by the US Census

Bureau.

Entire country

Maximum LTV ratio 100% (102% with financed

upfront premium)

96.5% (98.25% with financed

upfront premium)

Income limit The law provides a limit of 115%

of median area income. In

practice, the USDA income limit

well exceeds 115% of median

area income.

None

Debt limit Principal, interest, taxes, and

insurance: 29% of gross monthly

income

Total of all monthly debts: 41%

of gross monthly income

Both limits have some flexibility.

Median for total-debt-to-income

ratio is about 42%, with about

17% being greater than 50%.

Mortgage limit None (income limit and debt

formulas create an effective

mortgage limit).

Ranges from a floor of $271,050

for one-unit properties to a ceiling

of $729,750 for one-unit properties 6

in higher-cost areas.

Mortgage insurance

premium

2% upfront and 0.30% annually

on loan balance.

Present value estimated at

3.35%.

1.75% and 1.2% or 1.25%

annually on loan balance.

Present value estimated at 7.15%

or 7.38%.

Credit history No minimum FICO credit score.

Applicants must have reasonable

credit histories.

While no minimum FICO score,

program requirements effectively

limit to a minimum 580 score.

Limit on seller

concessions

None Current: Less than or equal to 6%.

Proposed: Greater of 3% or

$6,000.

*Housing Assistance Council, Estimating Potential Changes to USDA-RD’s Eligible Area Designations (Washington, DC:

Author, September 11, 2011), www.ruralhome.org/storage/documents/usdaeligibilityreport.pdf (March 5, 2012).