What Government Mortgage Program is Right for You?

Estimated reading time: 2.5 minutes

When it comes to home financing, there are a lot of factors that influence what loan program will work best for you. Not every mortgage program is the same, each program often has its own different requirements and highlights. To help educate you on different programs that may work for your needs, let’s take a closer look at the three major government programs we offer and what borrowers would work best for each.

What Makes Government Programs Different Than Other Mortgage Programs?

Government mortgage programs are called such because they are either insured or guaranteed by an aspect of the federal government. This is assurance to lenders that they will be protected from financial loss if a borrower defaults, or stops paying their loan. This is different from conventional loans, which are not backed by any government agency.

What Government Programs Does Homestead Funding Offer?

FHA

FHA mortgages are insured by the Federal Housing Administration which is a subset of the United States Department of Urban Development. They have down payment requirements as low as 3.5%, allowing borrowers the ability to purchase a home without having to worry about putting down 20%. Additionally, gift funds may be used for the down payment, closing costs, and other prepaid expenses.

An FHA mortgage is best for borrowers who have less than perfect credit and want to purchase a home with a small down payment. With no first-time homebuyer restrictions, these loans are great financing solutions for first-time or move-up homebuyers!

USDA

Sometimes when thinking of USDA loans, people assume a homebuyer wants to live in a rural location but that isn’t necessarily true. The home must be within USDA-eligible boundaries, but suburban areas are eligible as well. In fact, 97% of American land is within eligible boundaries. These mortgages offer 0% down payment options and have no first-time homebuyer restrictions.

A USDA mortgage is best for borrowers who are looking to own a home outside of city limits and have low to moderate income for their area.

VA

Guaranteed by the U.S. Department of Veteran Affairs, VA mortgages have liberal qualifying requirements to make homeownership affordable for military service members and families. They have no down payment requirement and no monthly mortgage insurance.

A VA mortgage is best for borrowers who are Veterans, National Guard members, active service members, reserve members, and some surviving spouses.

The mortgage program that worked for your loved one or neighbor may not be the best fit for you. That’s why at Homestead Funding, our Loan Originators work personally with each borrower to find the best home financing solution for you. Contact us to get started!