By, Gaurav Bhola, MSM
Government loans are mortgage loans that are insured or guaranteed by the federal government. These loans are designed to aid home buyers who meet mortgage criterion that allow them to get into a home either with a lower down payment , a lower interest rate and/or with a lower credit rating.
In many instances consumers seek government loans because they do not qualify for a conventional loan.A conventional loan is simply any loan that is not a VA loan, FHA loan, RHS loan, state or local government loan.
The following three federal agencies provide government loans. Also, the homes purchased must meet certain standards to apply.
U.S. Department of Veterans Affairs (VA) Loans
- Qualified military veterans are able to purchase a home under $203,000 with no down payment.
Federal Housing Administration (FHA) Loans
- FHA does not provide home loans.
FHA provides the mortgage lender insurance that will compensate the lender for any losses in case of default on the loan
Very low down payment on your home. (between 3-5% based on the FHA appraisal value)
Maximum loan limit depends on the average cost of living in your local area
Flexibility in calculating household income to payment ratios
Rural Housing Services (RHS)
RHS does not provide mortgages, it simply guarantees mortgage loans made to rural residents
Low interest rate loans with no down payment to low to moderate income rural residents
Loans have lower closing costs than with conventional loans
State and Local Loan Programs
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