Government loan programs

Government secured loan programs - the safe option in today's turbulent market.

The Big Three:

FHA loans -

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% down payment is required (but can be a gift or government grant).
Closing costs can be financed.
Lower monthly mortgage insurance premiums and, under certain conditions, automatic cancellation of the premium.
More flexible underwriting criteria than conventional loans (no risk fees down to 640!)
Loans may be assumable to qualified buyers should you want to sell
Homes can be refinanced up to 85% LTV to pay of debts or for other purposes

CLICK HERE TO LEARN MORE ABOUT FHA!

USDA Loans -

Also referred to as Rural Development mortgages, these loans have evolved from the old 'Farmer' Home' program that was set up to provide financing in rural areas that conventional lenders often avoided. This program has become the PREMIERE mortgage product for working families in rural (and often suburban) areas.

The many benefits of the USDA GUARANTEED RURAL HOUSING PROGRAM:

Provides 100% loan-to-value financing for existing homes or new construction based on appraised value.
Available to low and moderate-income rural households.
Seller can pay ALL closing costs - a true 'no money down' mortgage.
No requirement to be a "first-time" home buyer.
No monthly mortgage insurance required. One-time guarantee fee of 3.5% of loan amount, payable to Rural Development (RD) at closing, which may be financed above the appraised value, or paid by the seller.
Fully amortized 30-year fixed-rate loans.
No maximum loan limit. Loan limits are dictated by the applicant's income with respect to program eligibility and loan repayment ability. Previous ties to FHA loan limits have been eliminated.
No W2's required. Verification of employment by the lender is all that is required.
Credit scores down to 640 are accepted with no additional charges.

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:

Negotiable interest rates.
Closing costs are comparable and sometimes lower - than other financing types.
No private mortgage insurance requirement.
Right to prepay loan without penalties
The Mortgage can be taken over (or assumed) by the buyer when a home is sold.
Counseling and assistance available to veteran borrowers 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 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.