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Government loan programs
FHA loans
An FHA loan is insured by the Federal Housing Administration, a federal agency within the U.S. Department of Housing and Urban Development (HUD). The FHA does not loan money to borrowers, rather, it provides lenders protection through mortgage insurance (MIP) in case the borrower defaults on his or her loan obligations. Available to all buyers, FHA loan programs are designed to help creditworthy low-income and moderate-income families who do not meet requirements for conventional loans.
Some of the other benefits of FHA financing:
- Only a 3 percent down payment is required through Dec 31, 2008.
- Down payment to increase to 3.5% Jan 1, 2009.
- Lower monthly mortgage insurance premiums and, under certain conditions, automatic cancellation of the premium.
- More flexible underwriting criteria than conventional loans
- FHA limits the amount lenders can charge for some closing cost fees (e.g. the origination fee can be no more than 1% of mortgage).
- Loans are assumable to qualified buyers.
- FHA has loan limits by state/county (FHA FW)
- Condo must be FHA approved condos.
- Streamline Refinanceing available.
- Although mortgage insurance is not required, FHA charges a Mortgage Insurance to issue a guarantee to a lender against borrower default on a mortgage. This fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount. The fee varies to the type of loan and ltv. Generally for a buyer at 97% LTV this will be 1.75% upfront and .55% monthly.
- FHA loan programs are particularly beneficial to those buyers with less available cash. The rates on FHA loans are generally market rates, while down payment requirements are lower than for conventional loans.
- $100 Down HUD Loan Program. Available for a limited time. HUD has provideded and incentive for HUD homes only to be purchase with $100 down payment. HUD to provide 3% toward your closing costs. You must be pre-approved and work with a HUD approved real estate agent.
- Good Neighbor Next Door Program. Available for a limited amount of time. Law Enforcement, Pre-K -12th grade teachers and EMTs are eligible to purchase homes for $100 Down at a discount of 50% of List Price in areas to be considered Revitilization Areas. Search by State/County or by Address.
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VA Loans
VA guaranteed loans are made by lenders and guaranteed by the U.S. Department of Veteran Affairs (VA) to eligible veterans for the purchase of a home. The guaranty means the lender is protected against loss if you fail to repay the loan. In most cases, no down payment is required on a VA guaranteed loan and the borrower usually receives a lower interest rate than is ordinarily available with other loans.
Other benefits of a VA loan include:
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Closing costs are comparable and sometimes lower - than other financing types.
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100% financing
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Right to prepay loan without penalties
- More flexible underwriting criteria than conventional loans
- The Mortgage can be taken over (or assumed) by a VA eligible buyer when a home is sold.
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Counseling and assistance available to veteran borrowers having financial difficulty or facing default on their loan.
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Steamline refinance available.
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Although mortgage insurance is not required, VA charges a funding fee to issue a guarantee to a lender against borrower default on a mortgage. This fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount. This fee will vary to the buyer's circumstances. Generally first time buyers will be charge 2% Funding Fee with no monthly Mortgage Insurance.
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VA loan can be used to buy a home, build a home and even improve a home with energy-saving features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/caulking, storm windows/doors or other energy efficient improvements approved by the lender and VA.
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A Certificate of Eligibility from the VA must be presented to the lender to qualify for the loan.
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HUD 184
HUD 184 guaranteed loans are made by lenders and guaranteed by the Office of Native American Programs (ONAP) to eligible Native Americans for the purchase, refinance or construction of a home. The guaranty means the lender is protected against loss if you fail to repay the loan. In most cases, minimum down payment is required on a HUD 184 guaranteed loan and the borrower usually receives market interest rates than is ordinarily available with other loans.
Other benefits of a HUD 184 loan include:
- Only 2.75% down payment is required
- Closing Cost can be financed.
- No private mortgage insurance requirement.
- Right to prepay loan without penalties
- 150% of FHA (HECM) Loan Limits
- More flexible underwriting criteria than conventional loans
- FHA limits the amount lenders can charge for some closing cost fees (e.g. the origination fee can be no more than 1% of mortgage unless for constructin at 2%).
- The Mortgage can be taken over (or assumed) by an eligible Native American buyer when the home is sold.
- Financing can be provided on Indian Land.
- Streamline Refinance available.
- Although mortgage insurance is not required, the HUD 184 charges a 1% Loan Guarantee Fee to issue a guarantee to a lender against borrower default on a mortgage. The fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount. HUD 184 does not charge a monthly mortgage insurance premium.
- HUD 184 loan can be used to buy a home, build a home and even improve a home, refinance.
- Native American borrower must provide evidence that they are affiliated with a Government recognized Indian tribe.
- Lending on Indian land requires a recorded homesite lease which is to be reviewed by the lender.
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USDA Rural Loan Programs
USDA Rural Guarantee or Direct Loans are made by lenders and guaranteed by the United State Department of Agriculture (USDA). In order to be eligible for many USDA loans, household income must meet certain guidelines. Also, the home to be purchased must be located in an eligible rural area as defined by USDA.
Check property eligibility or income limits, please visit the USDA website.
Rural Housing Direct (502 Direct Loans):
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Directly guaranteed by the Government
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100% financing to purchase existing dwelling, purchase site and construction, or newly constructed homes located in rural areas.
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Mortgage payments are based on the household adjusted income.
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Funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare the sites including providing water and sewage facilities.
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Borrowers must be "Very Low" below 50% of the AMI or "Low" 50-80% AMI.
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Families must be without adequate housing and afford the payments
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Terms are from 33 years. Up to 38% for applicants below 60% AMI. Manufactured homes are for a 30 year term.
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Although mortgage insurance is not required, the Rural loan charges a 2% Loan Guarantee Fee to issue a guarantee to a lender against borrower default on a mortgage. The fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount. Rural loan does not charge a monthly mortgage insurance premium.
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Rural Housing Guaranteed (Under the 502 Program)
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100% financing to purchase existing dwelling, purchase site and construction, or newly constructed homes located in rural areas.
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Mortgage payments are based on the household adjusted income.
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Funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare the sites including providing water and sewage facilities.
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Families must be without adequate housing and afford the payments
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Terms are from 30 years.
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Although mortgage insurance is not required, the Rural loan charges a 2% Loan Guarantee Fee to issue a guarantee to a lender against borrower default on a mortgage. The fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount. Rural loan does not charge a monthly mortgage insurance premium.
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