VA and FHA mortgage government loans can make owning a home possible for individuals that don’t qualify for conventional mortgage loans. Their guidelines offer greater flexibility than a conventional loan and require a lower amount for a down payment.
What’s A Veterans (VA) Loan?
Veteran loans are insured loans which are insured by the Department of Veterans Affairs. If you are or were a member of the United States armed forces or a current or surviving husband or wife of a military serviceman, you will qualify for a VA loan. A VA loan can provide you with a lower interest rate and require little or no down payment.
However, the amount of the loan is more limited than with a conventional loan. You should talk with a lender to determine if a VA loan provides a large enough loan for the type of house you want.
How Does A Federal Housing Administration (FHA) Loan Work?
FHA mortgage loans are backed by the government to encourage lenders to offer loans to those that can’t meet the 20% down payment or income requirements. This loan offers easier requirements to help people with low to moderate incomes and first time buyers obtain homeownership.
FHA loans are similar to conventional loans because they also require an insurance payment called a mortgage insurance premium (MIP). This protects the lender in case the buyer defaults on the loan, like private mortgage insurance works on conventional loans. If the buyer does default, the MIP’s are used to pay the lender the amount still owned on the loan.
