Government Home Loans: Find the Right Loan for You

If you are like most people, and you do not have enough cash to go buy a property you will be happy to find out that there are several options of advantageous government home loans. Through these programs the US government offers solutions even to customers seeking flexible credit qualifying requirements with low or even zero down payment costs. There are 3 main types of government subsidized home loans: VA Loans, FHA Federal Home Loan, and the USDA Rural Loan Program.

VA Loans

A VA loan is a mortgage loan made through a private lender and guaranteed by the U.S. Department of Veterans Affairs (VA) as long as guidelines are met. This type of loan has been designed to provide long-term financing to eligible American veterans or their surviving spouses. Military personnel, veterans, and military families are eligible to apply for a VA loan. The list of those eligible to apply to this type of loan include:

• Veterans
• Active-duty personnel
• Reserve  members
• National Guard members
• Spouses of military members who died while on active duty and have not re-married

In order to be eligible you must have a valid Certificate of Eligibility as well as a satisfactory credit and sufficient income to meet the anticipated monthly payments. You can check the Department of Veterans Affairs website for a detailed list of eligibility requirements. Some of the advantages of a VA loan are:

• No down payment - qualified borrowers can finance 100% of the home's value if the purchase price doesn’t exceed the appraised value
• No private mortgage insurance – as all VA Loans are guaranteed by the federal government that also assumes the risk on behalf of the borrower no private mortgage insurance is needed
• Low interest rates - VA interest rates are usually 0.5 to 1% lower than regular interest rates due to the inferior risk assumed by the bank that finances the loan.
• VA Loans also offer low down payments for JUMBO sized loan amounts.  For example, someone purchasing a $650,000 home in Clark County can put down as low as $58,250 or 8.96% down & still have ZERO mortgage insurance with the same fantastic VA loan rates.

FHA Federal Home Loan

An FHA loan is a mortgage insured by the Federal Housing Administration, a government agency within the U.S. Department of Housing and Urban Development. The funds are received by the borrower from an FHA-approved lender, and not by the FHA itself. The qualification process is much easier due to less stringent down-payment and credit requirements than conventional mortgages. There are quite a few reasons for potential home-buyers to investigate the advantages of an FHA home loan

• Flexible qualification requirements
• Lower Credit Thresholds - Home buyers may be able to qualify even without a long credit history; even a previous foreclosure, short sale or bankruptcy will not disqualify you
• Low down payment requirements - FHA requires a down payment of just 3.5% of the purchase price of the property
• Low Credit Score - Borrowers can qualify for an FHA loan with a minimum FICO score of 580
• Higher allowable debt to income ratios

USDA Loans

The USDA Rural Development Guaranteed Housing Loan. However, also known as a USDA loan is a unique program. It is the only no-down payment program still available besides the VA loan. An USDA loan is a mortgage backed the U.S. Department of Agriculture and is available to those home buyers that have a moderate income; if you make more than 115% of your area’s median income you will not be eligible for USDA financing.  This type of loan offers 100% financing with reduced mortgage insurance premiums, and below-market mortgage rates. A small annual fee will be required to obtain an USDA loan as well as an upfront premium of 2% of the loan amount that can be rolled into the mortgage, giving you the option to obtain a mortgage without putting any money down. The USDA doesn’t have a strict credit minimum, but most lenders require their clients to have at least a 620 score with no foreclosures, bankruptcies in the past several years. You can read the details of buyer and property requirements on the USDA’s website. Eligible applicants may build, rehabilitate, improve or relocate a dwelling in a specific area defined by the USDA as rural. You can find a map pointing the eligible regions here.

To learn what your options are and what are the different requirements and features of each loan call Casey Moseman @ 702-271-1274. By familiarizing yourself with the available government home loans you can better determine which type of loan suits your needs.