GOVERNMENT Loans
Government mortgage loans are regulated or provided by a government institution such as the Federal Housing Administration (FHA), the United States Department of Veterans Affairs (VA), or the U.S. Department of Agriculture (USDA). These loans are provided to help borrowers buy, build, or repair a home depending on their eligibility.
Some available government loan options are:
FHA Loans
Jump to sectionVA Loans
Jump to sectionUSDA Loans
Jump to sectionReverse Mortgages
Jump to sectionFHA
FHA loans are mortgages administered by the US Department of Housing and Urban Development and insured by the Federal Housing Administration (FHA). The insurance from the FHA protects the lender if a borrower defaults on the FHA loan. With this protection, lenders are able to provide loan options commonly not offered through conventional financing. Because of their low down payment requirements, FHA mortgages are often well suited for first-time homebuyers.
For homebuyers with limited funds for a down payment or a rougher credit history, the FHA mortgage could provide the solution they need in-home financing. Compared to conventional mortgages, FHA loans typically offer more flexible underwriting, more lenient debt to income requirements, and looser conditions for past collection or pay off accounts. FHA loans typically have fixed interest rates.
First-time home buyers might be well-served with the FHA loan. For first-time homebuyers, saving enough funds for a substantial down payment can be one of the most challenging parts of buying a home. Since FHA loans can offer lower down payment requirements and also allow home buyers to roll closing costs and other fees into the loan amount, these might be a wise mortgage option for first-time home buyers.
VA LOANS
VA mortgages are loans guaranteed by the Department of Veterans Affairs (VA) and made through approved lenders – like Sunshine Financial GroupThe VA insures these loans, thereby protecting the lenders if borrowers default on this type of mortgage. VA loan borrowers can include eligible Veterans, active duty military personnel, and, in some instances, their spouses. Often requiring no down payment, this is an excellent choice for eligible borrowers purchasing their primary residence.
VA loans have many of the standard requirements of other home financing options such as providing evidence of the ability to repay the loan and exhibiting substantial credit. One additional condition is that qualified borrowers will need to provide the lender a certificate of eligibility when applying for a VA loan. This can be acquired through the Department of Veterans Affairs.
For more specifics and a detailed list of the VA loan requirements, visit the Department of Veterans Affairs website at benefits.va.gov/homeloans
USDA
Guaranteed through the U.S. Department of Agriculture, USDA loans are government-insured home loans that allow borrowers to purchase homes in designated ‘rural’ areas with no money down. The ‘rural’ regions outlined by the USDA vary greatly and can frequently include suburban areas neighboring major metropolitan cities.
Offering 100% financing with fixed rates, USDA loans (also known as the USDA Rural Development Guaranteed Housing Loan or Section 502 Loan) are unique in that they are currently the only zero money down mortgage program available for non-military personnel. They also provide the opportunity for the closing costs to be paid by the seller or financed into the loan amount.
USDA Loans were originally established in 1991 to increase the number of homes purchased in rural areas. With the U.S. Department of Agriculture loosely defining ‘rural’ areas, many properties located in communities near large cities are eligible. These loans are available for both first time home buyers and repeat home buyers and offer competitive interest rates. Only a limited number of specially approved lenders, like First Sunshine Financial Group, are able to offer this program.
REVERSE MORTGAGES
Designed to assist senior citizens living on limited incomes, Reverse Mortgages enable homeowners who are at least 62 years of age to remain in their home. Instead of making monthly mortgage payments, homeowners actually receive payments secured by the home’s equity from the lender. Thus, it was named a Reverse Mortgage.
As long as homeowners participating in a Reverse Mortgage continue living in the home as their principal residence or do not fail to meet the obligations of the mortgage, they do not have to repay the amount. Property taxes, homeowner’s insurance, and condominium fees (if applicable for condo owners) must also remain current. At the time the home is sold or vacated by the borrowers, the loan must be paid back.
While there are no guidelines on how the funds must be used, Reverse Mortgages were created to provide senior citizens who live on limited incomes a wonderful opportunity to access funds to help support monthly living and health care expenses.
