The Federal Housing Administration (FHA), which is part of the Department of Housing & Urban Development (HUD), plays an active role in encouraging homeownership in the United States. To do this FHA works with an approved network of lenders to make loans affordable to a larger pool of borrowers.
FHA mortgages are home loans that are insured by the Federal Government. This insurance protects the lender from losses if the home goes into foreclosure. It is not the same as hazard insurance. This program offers low down payments, and are available on 1-4 unit properties.
FHA allows the borrower to get the funds necessary to close from several sources. They include such areas as personal savings, gifts, loans from retirement accounts and seller contributions.
In the long run, FHA loans are generally easier to qualify for, and FHA programs also offer more than just home purchasing plans. They offer refinancing options to lower interest rates or payment amounts, as well as cash out or debt consolidation loans.
Although the requirements are less strict than conventional loans, by law, the FHA can only insure loans up to a maximum amount depending on where the home is located. The FHA maximum limits site will let you look up the limits for the area of your choice.
These loans were originally developed to encourage lenders to offer military veterans more favorable loan terms than those found elsewhere. VA guaranteed loans are made by a lender, and with a VA loan the lender is protected against loss by the Federal Government. AS a result eligible borrowers may have a greater chance of getting qualified for a VA mortgage than a conventional mortgage.
Some key benefits of a VA loan are:
• No down payment required in most cases
• Loan value may be up to 100% of the VA-established property value, up to a maximum of $417,000.00
• No monthly mortgage insurance premiums
• No pre-payment penalties
In general, a service member is eligible for a VA home loan if he or she meets any one of the following requirements:
1. Served 181 days during peacetime (Active Duty)
2. Served 90 days during war time (Active Duty)
3. Served 6 years in the Reserves or National Guard
4. Is the spouse of a service member who dies while in service or from a service-connected disability.
VA loans can be used to purchase a home, or condominium (in a VA-approved project). These loans may also be used to build a new home or purchase and improve an existing property. A VA loan can also be used to install more energy-efficient features, refinance and/or cash out an existing VA loan, or conventional mortgage. All loans must be for owner occupied homes.
The purpose of this loan program is to enable low- and moderate-income (up to 115 percent of the area median family income) rural residents to acquire housing for their own use as a primary residence. The program is available for the purchase and repair of existing and newly constructed dwelling. The USDA does this to encourage growth in rural parts of the country, so the home must be located in a qualifying area considered rural/suburban.
These loans are insured by the U.S. Department of Agriculture and offered through a network of approved lenders in the Rural Housing program.
• No down payment required
• Loans available up to 102% of the appraised value or sales price.
• Government Guaranteed (No private mortgage insurance)
• Flexible credit guidelines
• You have the ability to roll your closing costs into the loan
The loans are eligible for the borrower’s primary residence and must be owner occupied. Single family non-farm residences, along with approved condominiums and PUDs are acceptable, and can be used by first-time buyers and repeat buyers.
The USDA program allows gift from family members to help cover any closing costs. Additionally the program allows sellers to pay closing costs for buyers. These costs can include any state or local government fees, lender fees, title changes and a number of pest and home inspections.