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Government Home Mortgage Loan Programs

Since when did the government start giving out home mortgage loans? They have been for a while, only they arenít the type that you can go knocking on the door of the President and request. Government Home Mortgage Loans are provided through government programs such as FHA and the VA and are made by private lenders, which target the homebuyer directly, and rely on the government to it up.

As with any home mortgage loan you have to figure in closing costs, fees, and points that may be included in loans guaranteed or insured by the government. Some of these costs will be paid by the seller and some will be paid by you, the buyer. If you canít come up with the money for the fees that you are responsible for as the buyer, you have the option of having them added to the final cost of your new home.

 

FHA Home Mortgage Loans

The FHA or Federal Housing Authority is a government run program that was founded in 1934, its purpose was to try and help more people qualify for a home mortgage loan in the days after the Great Depression. The Federal Housing Authority provides home mortgage loans through private lenders. The amount that the FHA loans you is insured so should you default on your home mortgage loan payments, the company that provided the loan to you doesnít have to foreclose on your home. The great thing about a FHA home mortgage loan is that any United States citizen can apply for one; the interest rates are much lower than any conventional type of home mortgage loan, the down payment requirement is typically only 3% of the total cost of the home, and your monthly payments are based on whatever 30% of your monthly income is. Closing costs on a conventional home mortgage loan are usually quite high, but with FHA home mortgage loans the closing costs average two and one-quarter percent. There is however a limit on how much you can borrow, which can make deciding to get a FHA home mortgage loan hard depending on the cost of the home you are looking to buy. A perk of a FHA home mortgage loan is that should you decided to sell your home before the end of the loan, the person you sell your home to can take over the existing FHA home mortgage loan, which because of the low interest rates and the minimal monthly payments can be a very enticing incentive to purchase your home.

 

VA Home Mortgage Loans

VA home mortgage loans are offered through the Department of Veteran Affairs specifically to service men and service women and a select number of government employees. The home mortgage loan is guaranteed, so that the private lender will be repaid should the borrower default on their payments. The qualifications for a VA home mortgage loan are less restrictive than the qualifications of a conventional home mortgage loan, which makes it easier for the service people and veterans to buy a new home. These types of loans offer great benefits such as smaller down payment requirements, better terms on fixed rate home mortgages and adjustable rate home mortgages. VA adjustable rate mortgages only increase or decrease a total of 1% per year and only a total of 5% over the total life of the loan. VA loans are a small token from the government, a way of making it easier for service people to start new lives in a new home once they come back from war.

See also Conventional Home Mortgage Loans

Home Mortgages
Applying for a Home Mortgage Loan


 

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