How Government-Backed Home Loans Can Help You Buy Your Dream Home

When seeking financing for their dream homes, most homebuyers are faced with a variety of loan programs. Among these many and varied choices, government-insured loans are popular options due to their accessibility, affordability, and security.

Easier Qualification

The ability to qualify for a mortgage is one of the biggest obstacles many overcome in getting their new homes. But that hurdle isn’t always as high as with FHA loans and USDA loans; as these loans are backed by the U.S. government, they often come with attractive interest rates, reasonable credit requirements, and low down payment requirements compared to other mortgage options. Borrowers with FICO scores as low as 580 can often qualify for FHA loans – one big reason FHA loans are so popular with first-time homebuyers who may not have had has much time to build up a solid credit history. And available for borrowers with FICO scores as low as 640, USDA loans are good options for those with less-than-perfect credit who are looking to purchase homes in rural and sometimes even suburban areas.

Loans With Low or No Down Payments

For a mortgage option with a lower down payment than many other lending programs, homebuyers often turn to FHA loans that allow for a minimum of a 3.5% down. The upfront savings don’t stop there; FHA loans allow for home sellers to contribute up to 6% of the closing costs, and for the buyer, down payments could come in the form of gift money. Designed with low to moderate-income homebuyers in mind, USDA mortgages don’t require down payments. Adding to the initial savings, the mortgage insurance requirements for USDA loans are lower than they are for most federal-backed loans.

Versatility is another plus with both USDA and FHA loans, as they can be either fixed or adjustable-rate mortgages and used for single-family homes, properties with one to four units, and, in many cases, condos.

Refinancing Made Easy

The benefits of government-backed financing don’t stop after you get the keys to your home. Borrowers with FHA, VA, and USDA home loans can save both time and money with streamline refinancing. Refinancing a government-insured loan this way usually requires less documentation than other refinancing options, often with no credit scores or employment verifications needed. Plus, there’s no appraisal needed with FHA or USDA streamline financing. For borrowers who want to use their home equity to put money in their pockets, cash out refinancing is also made easy with government-insured loans.

Could a loan with assurances from Uncle Sam be the best way to get your dream home? Contact us today to talk about government-backed loans and more.

Disclaimer: Please note that underwriting guidelines are subject to change and may have already changed by the time you are reading this post. Always check with a mortgage loan originator for the most accurate and updated information on loan requirements.