Government Loan Programs

Todd Sisson By Todd Sisson

Government loan programs are a great way for buyers to purchase a home with little or no down payment.  Some buyers may not realize they could be approved for a government loan and make their dream of home ownership come true.  Below are three programs that have helped many people just like yourself purchase a home when a conventional loan was not the right fit.

  • FHA – FHA loans are insured by the Federal Housing Administration and are good options for people with less than 5% cash down to pay on the purchase because the minimum down payment is only 3.5%. They are also assumable, meaning they can be transferred to the buyer of your home if you choose to sell before the mortgage is paid.
  • VA – VA loans are insured by the Veterans Administration. This type of loan is one of the benefits military personnel receive for their service to their country. VA loans do not have a down payment requirement, which means the buyer can get financed for 100 percent of the purchase price of the home.
  • USDA/RD – USDA/RD (Rural Development) loans are insured by the USDA. These loans, like VA loans, do not have a down payment requirement. However the property must be located within an RD eligible designated area.

Because of the lower down payment options, government loans have added fees to reduce the risk to the mortgage holder. In most transactions these fees are charged to the borrower.  However when buying real estate with a government loan, there is an option that allows for the seller to pay some of these fees. Government loans will allow the seller to pay up to 6% of the total sales price towards the loan fees at closing.

Some government loan programs also provide benefits for first time home buyers.  It is always a good decision to discuss these options with the loan officer prior to shopping for a new home.  Having this knowledge will help buyers throughout the negotiation process and ensure they are happy with their decision.

Navigating the home mortgage process can seem daunting, and many people think they would not qualify. By educating yourself on these available government loan options, you may find that you are much closer to buying a home than you may have thought.