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USDA reportedly raising guarantee fees for 0% down mortgages

Increase to go into effect on Oct. 1

The price that borrowers pay for a 0% down payment loan from the U.S. Department of Agriculture’s Rural Housing Service is reportedly set to rise later this year.

According to a report from Bloomberg, the USDA will raise the upfront feed paid by buyers for a 0% down loan from 2% to 2.75%.

From the Bloomberg report:

The move will enable the $24 billion program “to continue to sustain itself without a congressional appropriation to offset credit-related costs,” Sandretti (a USDA spokesperson) wrote.

The need for the increase stems from losses on properties financed during the last decade’s U.S. housing bubble exceeding those on homes that weren’t overvalued at origination, according to Sandretti.

The change is expected to go into effect Oct. 1.

[Correction: A previous version of this article referred to the U.S. Department of Agriculture as the USDS, not the USDA. The article is now correct.]

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