Buying a home is really important as it is not every day that you can buy a new house for yourself. Apart from this, there is also the fact that buying a home requires you to take out a mortgage which is a secured loan. There have been such mortgage cases where inability to pay back the mortgage has resulted in the foreclosure of the house. Thus you should be very careful while taking out a mortgage. Since you are keeping your house as collateral, you better buy a mortgage that is within your economic means and which you will be able to pay back. There might be such cases that you are not getting a mortgage at suitable terms and conditions that you want to. Most common reason for this is if you don’t have a good credit score, you won’t get a low rate on your mortgage. Also your household income may not be sufficient to take on a mortgage and pay it back.
For helping you out with your mortgage, the government has devised some loans. Take a look at these in details.
- FHA loans – This is a fixed rate mortgage that has been specifically designed for first time homebuyers who have moderate or low income. These loans are guaranteed by the Federal Housing Administration and are easier to qualify for when compared to traditional FRM. The down payments you have to make for these loans are usually a lot less than other loans; it is usually 3% to 5%. Interest rates on FHA loans are also lower than standard fixed rate loans. FHA makes available to you programs for purchasing single family homes or multi-family homes as long as they are your primary residence.
- VA loans – This is another category of government guaranteed mortgage. In order to qualify for VA loans you need to have a history of active military service or be the surviving spouse of an active service member. Most often a military veteran can get a VA loan with little or no down payment. However, he should show sufficient proof of the ability to make monthly payments.
- USDA loans – These are Rural Development Guaranteed Housing Loan and are government guaranteed. This kind of home mortgage are meant for individuals who have low to moderate income and is purchasing a home in an area that is designated as Rural Development eligible area. You don’t require any down payment or mortgage insurance with this kind of a loan and the qualification criteria are extremely nominal.
Thus you can see how these three government guaranteed loans have now made the process of home buying more secure for individuals.
