Which mortgage loan is better: FHA or Rural Development's Guaranteed Home loan?

My husband and I are buying a builders spec home in Lafayette, IN for $115,000. The home is in a new community that qualifies for USDA loans. We have been pre-approved for a FHA mortgage through Bank of America & a local mortgage broker. FHA was the mortgage we were planning on taking until we found this house. Now... show more My husband and I are buying a builders spec home in Lafayette, IN for $115,000. The home is in a new community that qualifies for USDA loans. We have been pre-approved for a FHA mortgage through Bank of America & a local mortgage broker. FHA was the mortgage we were planning on taking until we found this house. Now we are torn between the two and are unsure on which one would benefit us now & in the long run.

Our objective - To use the least amount of money up front as possible, and maintain a total housing payment of less than $780 a month. (Interest rates quoted range from 5.125% to 5.5% & Taxes = $600yr & Home Ins. = $595yr)

I don't know much about the loans offered by the USDA but what I have learned is.....
*No money needed for a down payment - 100% financing
*Manual Underwriting through approved lenders - It can take up too two weeks to be fully approved
*No Private Mortgage Insurance
*Closing costs can be added to mortgage as long as the home appraises higher than purchase price -
*Higher Closing costs - Guaranteed loan fee for lenders to process loan is 2% of the total purchase price & lenders pass this fee to the buyers at closing

Any help with this is greatly appreciated! =)

Thanks,
Bre
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