Government Loans

FHA

The Federal Housing Administration was created in 1934 in an effort to bolster homes sales during the Depression. By financially guaranteeing loans, the FHA lifts much of the risk of non-payment and foreclosure from private lenders. It is important to remember that the FHA is not a lender; they just guarantee your loan.

Advantages:

  • Bankruptcy not an automatic disqualification
  • Lower interest rates
  • Down payment is less
  • Lower mortgage points and other closing cost requirements
  • Resale can be made more quickly
  • Is backed by the U.S. government

Features:

  • Down payment required
  • Higher upfront Mortgage Insurance Premium (MIP) than on conventional loans but monthly MIP is lower
  • Loan Limits are lower than conventional
  • MIP required regardless of the Loan-to-Value (LTV)

FHA 3.5% Down Payment

  • Lower Credit scores permitted (as low as 580)
  • Down Payment can be a gift from a family member
  • Minimum 2 years from Bankruptcy
  • Minimum 3 years from Foreclosure
  • Max 6% Seller Assist

 

VA

A VA loan is a mortgage loan guaranteed by the Veterans Administration. It was created in 1944 and signed into law by President Franklin D. Roosevelt. A VA loan provides veterans and/or their surviving spouses who have not remarried, with a federally guaranteed home with zero down payment. The program, also referred to as the GI Bill, has been highly successful and has helped millions of American veterans and their families acquire a home.

Advantages:

  • No down payment
  • VA does not require private MIP
  • Limit on the amount of origination fees and closing costs that the lender can charge
  • Limit also placed on appraisal fees

Features:

  • Borrower with eligibility remaining must have a Certificate of Eligibility from the VA
  • Borrowers are required to make a one-time funding fee based on loan amount and applicant’s service length.
  • Closing costs can be paid by the lender and the seller.

 

USDA RURAL HOUSING

The USDA Rural Housing Service has various programs available to aid low- to moderate-income rural residents to purchase, construct, repair, or relocate a dwelling and related facilities. USDA Rural Housing loan programs allow qualified homebuyers to get loans with minimal closing costs and no down payment.

Advantages:

  • No down payment requirement
  • Property must be located in an eligible rural area
  • Closing costs can be added to the loan amount (if the property appraises high enough to include it at up to 100% of the appraised value)
  • Loan government guarantee fee up front and annual
  • Low interest rates
  • Applicants with a wide range of credit profiles may qualify
  • Income eligible applicants who do not qualify for conventional financing may qualify
  • Families & individuals that have minimal funds for a down payment and closing costs includes first time homebuyers and repeat homebuyers
  • Seller concessions – 6% max
  • No cash reserve requirement
  • No Non-Allowable costs
  • No First Time Homebuyer Requirement
  • 30 Year Loan at competitive fixed rate
  • No limit on gift funds

Features:

  • Property must be in very good condition and have a high insulation R-factor
  • You cannot make over 115% of the median county income to qualify
  • Must be able to verify income limits