There are many different types of Government Loan Programs. Here are the three most popular:

FHA Loans

An FHA loan is insured by the Federal Housing Administration. It’s a federal agency within the U.S. Department of Housing and Urban Development (HUD). The FHA does not loan money to borrowers, rather, it provides lenders protection through mortgage insurance (MIP) in case the borrower defaults on his or her loan obligations. FHA loan programs are available to all buyers, and are designed to help creditworthy low-income and moderate-income families obtain a mortgage when they do not meet the requirements for conventional loans.

FHA loan programs are particularly beneficial to buyers who don’t have a lot of available cash. The rates on FHA loans are generally market rates, while the down payment requirements are lower than for conventional loans.

Some of the other benefits of FHA financing:

• Some closing costs can be rolled into your mortgage and financed.
• Lower monthly mortgage insurance premiums and, under certain conditions, automatic cancellation of the premium.
• More flexible underwriting criteria than conventional loans.
• FHA limits the amount lenders can charge for some closing cost fees (e.g. the origination fee can be no more than 1% of mortgage).
• Loans are assumable to qualified buyers.

For current FHA Requirements please click here.

VA Loans

VA guaranteed loans are made by lenders and guaranteed by the U.S. Department of Veteran Affairs (VA) to eligible veterans for the purchase of a home. The guarantee means the lender is protected against loss if you fail to repay the loan. In most cases, no down payment is required on a VA guaranteed loan and the borrower usually receives a lower interest rate than is ordinarily available with other loans.

Other benefits of a VA loan include:

• Negotiable interest rates.
• Closing costs are comparable and sometimes lower than other financing options.
• Private mortgage insurance is not required.
• You have the right to pay off the loan early without penalties.
• Counseling and assistance are available to veteran borrowers who are having financial difficulty or facing default on their loan.

Although mortgage insurance is not required, the VA charges a funding fee to issue a guarantee to a lender against a borrower’s default on a mortgage. The fee may be paid in cash by the buyer or seller, or it may be financed into the loan amount.

A VA loan can be used to buy a home, build a home, and even improve a home with energy-saving features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/caulking, storm windows/doors, or other energy efficient improvements approved by the lender and VA.

Veterans can apply for a VA loan with any mortgage lender that participates in the VA home loan program. A Certificate of Eligibility from the VA must be presented to the lender to qualify for the loan.

For current FHA Requirements please click here.

USDA or Rural Housing Loans

USDA loans are made on properties within a qualifying rural area. Applicants with very low to moderate incomes can qualify for these loans, but are still able to afford the housing payments, including principal, interest, and insurance-all of which are part of the monthly payment amount.

Other benefits of a USDA loan include:

• Affordable to those with lower incomes and good credit histories.
• No down payment required.
• New manufactured homes are acceptable as long as conditions are met.
• Available in 15-year or 30-year fixed rates.
• Closing costs and lender fees can be rolled into the loan.
• Renovation and repair costs can be rolled into the loan amount.

The property doesn’t have to be a farm or open land to qualify for this type of loan. It just has to be in a qualifying area.

For more information on USDA loans, please click here.

For a full list of Government Home Loan Programs and their qualifications, please click here.

When you’re ready to buy a home, it’s hard to know what your best options are financially. There’s a lot of information out there. Understanding it all can be challenging. We’re here to help, and can provide some answers to your mortgage questions. Acquiring a mortgage is a big step, and we’re helping people just like you reach their home-ownership dreams. Contact us today!