If you are ready to buy a house and are looking at loan options, it is a great idea to see if you qualify for a government-backed loan. There are a couple of different options for government-backed loans, some with great benefits and some that are very similar to a conventional loan. Here’s a look at some loan types backed by the government:
FHA stands for the Federal Housing Administration, and FHA loans are mortgages insured by the administration. They are designed for buyers who can’t afford a large down payment or have some dings to their credit, so FHA loans tend to be very popular with first time buyers. An FHA loan allows for down payments as low as 3.5% if your credit score is 580 or higher. However, there are a lot of fees associated with FHA loans, so if you can qualify for a conventional loan you may be better off going with that.
Veterans Administration Loans
A VA loan is a zero-down load offered to qualifying veterans, active military, and military families. The VA guarantees the loan for the lender, and the loan comes with benefits for any who qualify. Frequently, you will not need to pay anything down and you will never have to pay mortgage insurance if you qualify for a VA loan.
These loans are backed by the US Department of Agriculture and are designed to help lower income families buy or renovate homes in rural areas. If you are eligible for one of these loans, you can purchase a home with no down payment and get below-market mortgage rates. You do not need to be in the agricultural industry to qualify, and there are some suburban areas covered as well.