The federal government actively promotes homeownership, often extending financing to those who don't qualify for traditional bank loans. These programs generally don't serve investors. For buyers who intend to move into the home, however, government-sponsored options are plentiful.
The Federal Housing Administration runs the largest program, offering mortgage insurance to cover loans up to a fixed amount (previously set at $417,000, but recently raised to $730,000 in some areas under the 2008 federal economic stimulus package). "The beauty of FHA is because we are protecting the lender from risk of loss, the lender is able to make loans to borrowers with riskier credit profiles," says Meg Burns, director of the FHA's Office of Single Family Program Development. Burns estimates that three-fourths of FHA borrowers are first-time home buyers.
Other federal programs include:
- The Veterans Administration Home Loan Program, which provides mortgages to veterans.
- The Department of Housing and Urban Development's Teacher Next Door Program, which helps teachers buy homes.
- The Department of Agriculture's Rural Development Housing & Community Facilities Program, which extends financing to low-income buyers in rural areas.
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