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Which mortgage?


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So, my husband and I are trying to buy a house.

We have 2 specific requirements: 1. It has a shop/garage for him to fire up his forge and 2. It be livable for our family.

Recently, we have found out we are coming in to a sum of money and it changes our outlook on getting the house. We have 2 mortgages to choose from:

FHA-remodel: Typical FHA with one difference--you get up to 10% of the purchase price to remodel the home. This would make us able to get more house for the money and probably some place close to work (we both work in the downtown area).

USDA Rural Development loan: This is closer to our hearts. It is a 100% loan that must be property outside the city limits. This can mean more of a drive, but also more land (we eventually want to have a small farm).

The USDA is possible RIGHT NOW. The FHA would be possible after we get our check.

If we get the USDA, then get the check, we can use that check to make a payment straight to principle. Likewise, if the FHA down requirements and closing cost come out less than we expect and we have money left over, we can make a payment straight to principle.

Both loans take their rates from HUD and have comparable interest rates. The only real difference is location.

In the price range we are looking at properties (well below what we have been pre-approved for), our housing payment would be substantially lower than our current rent. We also pay very high renter's insurance (because I will not take chances with the stuff we have) and are renting a house, so most of our bills won't change in any significant manner.

Any recommendations?

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