Government loan programs
An FHA loan is insured by the Federal Housing Administration, a federal agency within the U.S. Department of Housing and Urban Development (HUD). The FHA does not loan money to borrowers, rather, it provides lenders protection through mortgage insurance (MIP) in case the borrower defaults on his or her loan obligations. Available to all buyers, FHA loan programs are designed to help creditworthy moderate-income families who do not meet requirements for conventional loans, however in today's real estate market many borrowers with good incomes and credit opt for FHA due to the lower down payment option, 3.5% or even 1/2% with some programs where a low downpayment mortgage is available. Conventional loans don't offer the low downpayment mortgage options as FHA does and interest rates offered on FHA loans are generally the same as conventional loans.
Some of the other benefits of FHA financing:
- A standard minimum 3 percent down payment is required.
- Some closing costs can be financed.
- More flexible underwriting criteria than conventional loans
- Loans are assumable to qualified buyers.
- There are some FHA programs that offer 1/2% down payment options.
VA guaranteed loans are made by lenders and guaranteed by the U.S. Department of Veteran Affairs (VA) to eligible veterans for the purchase of a home. The guaranty means the lender is protected against loss if you fail to repay the loan. In most cases, no down payment is required on a VA guaranteed loan and the borrower usually receives a lower interest rate than is ordinarily available with other loans.
Other benefits of a VA loan include:
- Negotiable interest rates.
- Closing costs are comparable and sometimes lower - than other financing types.
- No private mortgage insurance requirement.
- The Mortgage can be taken over (or assumed) by the buyer when a home is sold.
- Counseling and assistance available to veteran borrowers having financial difficulty or facing default on their loan.
Although mortgage insurance is not required, the VA charges a funding fee to issue a guarantee to a lender against borrower default on a mortgage. The fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount which is wonderful benefit.
A VA loan can be used to buy a home, build a home and even improve a home with energy-saving features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/caulking, storm windows/doors or other energy efficient improvements approved by the lender and VA.
Veterans can apply for a VA loan with any mortgage lender that participates in the VA home loan program. A Certificate of Eligibility from the VA must be presented to the lender to qualify for the loan, but I can help obtain this certificate for you as well.
The VA loan is an incredible benefit for service people who defend our country and put their lives on the line for our freedom. For me it's truly a privledge to assist a veteran to obtain a home loan, it's the least I can do in return for what they have done for us as a nation.
If you have any questions in regards to the FHA or VA loan please give me a call at 800-506-0632 *1 or to get prequalified for a loan click here or if you would rather text me your scenario click here
or even if I'm on line we can chat as well, click here for that option.