Following are a few examples of different scenarios to show how to calculate this fee correctly.
Example #1
Purchase Price $250,000
Appraised Value $258,000
Borrowers want to finance $8,000 in closing costs in the loan since the appraisal is higher than the purchase price. In addition, they will finance USDA’s guarantee fee.
Loan Amount $258,000 divided by .98 = total loan amount of $263,265.31
Subtract total loan amount $263,265.31 from loan amount $258,000 = $5,265.31 USDA Guarantee Fee
Total Loan Amount $263,265.31 X 2.00% = $5,265.31 USDA Guarantee Fee
Example #2
Purchase Price $300,000
Appraised Value $300,000
There is no room to finance closing costs; however, the borrowers would like to finance the USDA guarantee fee.
Loan Amount $300,000 divided by .98 = Total loan amount of $306,122.45
Subtract total loan amount $306,122.45 from loan amount $300,000 = $6,122.45 USDA Guarantee fee
Total loan amount $306,122.45 X 2.00% = $6,122.45 USDA Guarantee Fee
Example #3
Purchase Price $175,000
Appraised Value $190,000
There is a $15,000 difference between the appraisal and the purchase price, however, the borrowers only want to finance $10,305 in closing costs plus the USDA fee.
Purchase Price $175,000 + $10,305 closing costs = Loan Amount $185,305
Loan Amount $185,305 divided by .98 = total loan amount $189,086.73
Subtract total loan amount $189,086.73 from loan amount $185,305 = $3,781.73
Total Loan Amount $189,086.73 X 2.0% = $3,781.73