One of the first things you may learn when buying a home and considering your financing options, is that there are two distinct types of loans. The first is a conventional loan, or one which is a loan meeting the guidelines of Fannie Mae or Freddie Mac which are Government Sponsored Enterprises (“GSEs”), or conventional loans meeting the guidelines of private investors. The second type is a government loan which is either guaranteed or insured by a federal entity which are the Department of Housing and Urban Development, The Department of Veteran's Affairs, or the Rural Housing Service/USDA. -- The programs offered through the government agencies are often excellent options for buyers looking for a competitive rate and low to no down payment.
There are 3 common government-backed loans:
1. FHA Loans
FHA loans are mortgages that are insured by the Federal Housing Administration. In addition to offering attractive interest rates, FHA loans may have less stringent credit requirements and can be obtained with low down payments. Deciding between an FHA loan and a conventional loan? You should consider mortgage insurance, loan-level pricing adjustments, and assumability.
2. VA Loans
VA Loans are available to veterans of armed services, soldiers on active duty, or National Guard members. VA loans offer 100% financing (no money down) for purchase transactions below a specific loan amount. Not all VA loans are exactly the same: compare your options to get the best mortgage for you.
3. USDA / Rural Housing Loans
USDA loans are available to eligible homebuyers purchasing a home in qualified rural areas. Some advantages of these programs include no money down, 100% financing and lower-than-average interest rates.
How to Learn More About Government Loan Options
Check out our blogs on VA and FHA loans below, and check out the USDA website for details about eligibility. When you're ready to get started, we're ready!
If you are on the hunt to find a home whether you’re first-time homebuyer or a been-there-buyer. Finding the perfect loan type might seem like a daunting task, but we have several experienced Mortgage Banker to help you pick the best loan for you. Connect with our team today to see what options we have for you.
Topics: Refinance, Real Estate, FHA Loans, Interest Rates, Mortgages, First Time Homebuyer, Buying a Home, homebuying tips, VA Loans, FHA vs. Conventional mortgage, low down payment, home loan refinance, homebuying process, Government Home Loan, USDA Loans