For those who don’t meet the stringent requirements to get approved for a conventional loan, there are government-backed loan options available, such as FHA loans. These mortgages, which are guaranteed by the Federal Housing Administration, get a lot of attention from first-time home buyers and borrowers with less-than-perfect credit because of their more attractive features and easier lending requirements.
FHA mortgages offer low down payment requirements for those who may be unable to gather a large lump sum of money to put towards their home purchase. While the minimum down payment for a conventional mortgage is 5% of the purchase price of a home, FHA mortgages allow buyers to put down as little as 3.5%.
It should be noted that the Federal Housing Administration doesn’t actually issue the loans. Instead, it supports lenders should borrowers default on the mortgage payments.
VETERANS AFFAIRS (VA)
The VA Loan is a mortgage loan issued by approved lenders and guaranteed by the U.S. Department of Veterans Affairs (VA). The program was created in 1944 by the United States government to help returning service members purchase homes without needing a down payment or excellent credit. This historic benefit program has guaranteed more than 22 million VA loans to help veterans, active duty military members and their families purchase homes or refinance their mortgages. A VA loan is a mortgage loan is guaranteed by the United States Department of Veterans Affairs(VA).
Today, the VA Home Loan program is more important than ever to service members. In recent years, lenders nationwide have tightened their lending requirements in the wake of the housing market collapse, making the VA Loan a lifeline for military home buyers, many of whom find difficulty when faced with tough credit standards and down payment requirements.