Government Loan Programs


FHA loansleft

 

An FHA loan is insured by the Federal Housing Administration, 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. Available to all buyers, FHA loan programs are designed to help creditworthy low-income and moderate-income families who do not meet requirements for conventional loans.

 

FHA loan programs are particularly beneficial to those buyers with less available cash. The rates on FHA loans are generally market rates, while down payment requirements are lower than for conventional loans.

 

Some of the other benefits of FHA financing:

  • Only a 3.5 percent down payment is required.
  • 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.

 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 guaranty 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:

  • NO or LOW downpayments
  • Closing costs are comparable and sometimes lower - than other financing types.
  • NO private mortgage insurance requirement.
  • Right to prepay loan without penalties
  • Flexible credit guidelines

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

 

 

USDA Guaranteed Rural Housing 

 

This home loan option allows for 100% financing for eligible borrowers in rural areas.  Household income limitations do apply along with property location requirements.  Properties have to be located in areas designated "rural" by USDA.

Other benefits of a USDA loan include:

  • NO down payment
  • Closing costs can be financed in the loan or paid by seller
  • NEW annual fee paid monthly 
  • Right to prepay loan without penalties
  • Flexible credit guidelines

 

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