Everything You Need to Know About Government Home Loans

Money makes things possible—when you have enough of it, you can start your own business, go to school, own a house, and many more! Unfortunately, not many people have a sufficient amount in their bank accounts to reach all of their goals and achieve everything they wish. 

We may not live in a perfect world where everyone is financially stable, but luckily, there are ways that can help you get what you want. Through borrowing a loan, you can acquire enough money to achieve your life’s goals. If you’re going to launch a company, you can borrow from a bank to get capital, and if you wish to own a house, you have the option of applying for a home loan.

Mortgages have helped many American families live in their forever homes. If it weren’t for home loans, many people wouldn’t have their own residential properties! If you plan to be one of the many homeowners in the country, you must carefully think of what mortgage to apply for.

What Is a Government Loan?

When looking for the right loan, you don’t have to search very far—the U.S. government offers several loan programs to support your needs. If you don’t qualify for a loan from private mortgage lenders in Kalamazoo, you may want to consider applying for a government-backed mortgage.

The great thing about government mortgage loans is that you will have a much easier time applying for a home loan than conventional mortgages. Since government loans, such as VA and USDA loans, will not require you to make an initial payment, you may easily qualify for them. FHA, VA, and USDA mortgages have lower interest rates than conventional mortgages, and you will also pay less for insurance costs. 

Types of Government Mortgages

There are many government loan programs to help you purchase a home, and each one has its requirements regarding downpayment, credit score, and debt-to-income ratio. The three main types of government loans for buying a residential property are:

• VA Loan

The Veterans Affairs (VA) mortgage is only for current military personnel, veterans, and spouses of members who died. Backed by the U.S. Department of Veterans Affairs, this home loan has no minimum credit score requirements and charges lower interest rates.

To qualify for a VA loan, you must meet the basic requirements of the Department of Veterans Affairs, possess a valid Certificate of Eligibility (COE), and satisfy the requirements of the lender.

• USDA Loan

United States Department of Agriculture (USDA) loans are government mortgages for those who wish to purchase a home in a suburban or rural area. Like VA loans, USDA loans don’t require a down payment, but you must have a credit score of at least 640 to qualify for it. Visit the USDA website to ensure that the property you wish to purchase is located in an eligible rural area.

• FHA Loan

Backed by the Federal Housing Administration, this government mortgage requires a down payment, unlike VA and USDA Loans. Their down payment and credit requirements are lower than conventional loans, so they’re still accessible. To qualify for this loan, your credit score must be at least 580 or higher.

Conclusion

Applying for a home loan is arguable the most stressful part of the home buying process! Not only do you have to find a realtor, explore different properties, but you also need to secure the necessary funding to purchase your dream house. 

If it’s difficult for you to qualify for conventional loans, you may want to try applying for a government-backed loan! Try working with a mortgage broker in Kalamazoo to help you choose the right government mortgage, so you can finally rest easy.

Are you looking for the right mortgage? Let us, EST Home Mortgage, help you! We are a full-service independent mortgage broker in Kalamazoo, Michigan, specializing in helping families find their best mortgage with the lowest rate and personalized service. Get started today!