Government Loans

Government-backed mortgage programs provide crucial support to various groups of homebuyers, including first-time buyers, veterans, rural residents, and Native American families. These programs often come with competitive interest rates, low down payments, and flexible eligibility criteria, making homeownership more accessible. Here’s an overview of the key types of government-backed mortgage loans:

 

FHA (FEDERAL HOUSING ADMINISTRATION) LOANS
Federal Housing Administration (FHA) loans are designed to help first-time homebuyers and experienced homeowners alike by providing them with a low-down payment option. These loans are insured by the FHA, which is part of the U.S. Department of Housing and Urban Development (HUD).

Benefits of FHA loans:

- Lower down payments: FHA loans typically offer a much lower down payment option (compared to a traditional, non-FHA-insured mortgage), making them accessible to those who might struggle to save for a larger down payment.

- Flexible credit requirements: Borrowers with lower credit scores may qualify for an FHA loan.

- Competitive interest rates: FHA loans often have competitive interest rates, which can save borrowers money over the life of the loan.

- Refinances and renovation loans also available with an FHA loan.

 

VA (VETERANS AFFAIRS) LOANS

Veterans Affairs (VA) loans are available to military service members, veterans, and eligible surviving spouses.* These loans are guaranteed by the U.S. Department of Veterans Affairs.

Benefits of VA loans:

- No down payment: Qualified borrowers can purchase a home with no down payment, which is a significant benefit.

- No Private Mortgage Insurance (PMI): Unlike conventional loans, VA loans do not require PMI, which can result in substantial monthly savings.

- Competitive interest rates: VA loans often offer lower interest rates than conventional loans.

- Flexible credit requirements: VA loans have more lenient credit requirements, making them accessible to a broader range of borrowers.

Certificate of Eligibility* for VA loans:

In order to apply for a VA-sponsored loan, you will need to obtain a Certificate of Eligibility (COE). Your COE verifies to lenders that you meet the requirements necessary to obtain a VA-sponsored loan. Applying for a COE is straightforward and can be done online, through the mail or through a lender.

*Active duty military personnel and current National Guard members or Reservists who have never been Federal active service will need to present a current statement of service in order to obtain a COE. Veterans and current or former National Guard members and Reservists that have been activated for Federal active service will need to present a DD Form 214 confirming their past service.

 

USDA (U.S. DEPT. OF AGRICULTURE) LOANS

The U.S. Department of Agriculture (USDA) offers loans to promote homeownership in rural areas through its Rural Development program. These loans are intended to help low- to moderate-income families purchase homes in eligible rural areas.

Benefits of USDA loans:

- No down payment: USDA loans do not require a down payment, making them an attractive option for eligible borrowers.

- Competitive interest rates: These loans often have lower interest rates compared to conventional loans.

- Low Mortgage Insurance: USDA loans require mortgage insurance, but the cost is generally lower than that of FHA loans.

Basic qualifications for a USDA loan include:

• The property being purchased must be in a rural area as defined by the USDA.

• The property must be owner-occupied. Investment or vacation properties are not eligible for USDA loans.

• You must meet the income restrictions for the county the property is located in. Each county has a maximum income limit defined by the USDA. This maximum income limit depends on the cost of living, median income, and other economic characteristics of the county the property is located in.

 

NATIVE AMERICAN LOANS (SECTION 184) LOANS

The Section 184 Indian Home Loan Guarantee Program is specifically designed to help Native American families, Alaska Native families, tribes, and tribally designated housing entities purchase homes. This program is managed by the Office of Native American Programs (ONAP) and is guaranteed by the U.S. Department of Housing and Urban Development (HUD).

Benefits of Section 184 loans:

- Low down payments: Section 184 loans typically require a low down payment compared to a traditional mortgage.

- Flexible underwriting: The program offers flexible underwriting guidelines, making it easier for borrowers to qualify.

- Competitive interest rates: These loans often have competitive interest rates, which can make homeownership more affordable.

 

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