TYPES OF GOVERNMENT LOANS
Today more than any other time in history, homebuyers can enjoy their choice of many different governmental loans. These loans are designed to help people become homeowners and are backed by the federal government. As you will see from the information below, these are just a few of the choices you have.
Federal Housing Administration (FHA) – This type of mortgage loan requires just a 3% to 5% down payment. However, the maximum amount of the loan is based on the average cost of living in a specific area. Keep in mind that with an FHA loan, you do not have to have perfect credit. In addition, an FHA loan will cover up to 97.5% of the home’s purchase price but to qualify, your debt to income ratio must not be more than 41%. Finally, homes in your city should not be priced more than $180,000.
US Department of Veterans Affairs (VA) – For this type of mortgage loan, you would have to be a military veteran. However, you would be able to borrow as much as $203,000 and without a down payment. Then, closing costs would be the responsibility of the seller. In addition to using a VA loan for a new home purchase, you can also use this type of loan for refinancing or home improvements.
Rural Housing Services (RHS) – For this mortgage loan, the interest rate is low but only if you have a low to moderate income. Additionally, you would not be able to qualify for an RHS if you live in a small town or rural area.
Fannie Mae’s Community Home Buyer’s Program – In this case, loans would be provided to people with good credit but who do not meet other criteria for a traditional mortgage loan qualification.
3/2 Option – This loan requires 5% down but borrowers can often go as low as a 3% down payment. Additionally, if the down payment comes from a relative, nonprofit organization, or government agency, just 2% is required.
Fannie 97 – Finally, this mortgage loan provides people with enough income to make a monthly mortgage payment but not to make an initial down payment the opportunity to buy a home. In this case, borrowers put down just 3% down payment. Then, closing costs can be paid by a relative, nonprofit organization, or government agency would need to put down just 2%.