mortgage loans

Federal Housing Administration (FHA) Loans:

• The FHA does not lend money, they only insure the loan against homeowner default. The homebuyer helps pay for this insurance premium at closing.
  
  
• This role allow private lenders to extend affordable housing for low- to moderate-income level families. Lower or no downpayment is required in most cases.
  
  
• The interest rate on FHA loans is generally 0.5 - 1.0% lower than conventional loans.
  
  
• Loan maximum may be up to 100 percent of the FHA-established reasonable value of the property. These values may vary by region.
  
  
• Lookup FHA mortgage limits by region:
  https://entp.hud.gov/idapp/html/hicostlook.cfm
  
  

The FHA Advantage:

• The big advantage under the FHA program is that you can buy a home with minimum down — as little as 3% for the first $25,000, and 5% on the rest:
  
  For more information about low-down payment:
  http://www.hud.gov/howtobuy.cfm
  
  
• Another major advantage is that the entire down can come from another party in the form of a gift.
  
  
• The "housing" and "debt-to-income" ratios are higher for FHA loans — 29% for the housing ratio; 41% for the debt ratio:
  
  calculate your own qualifying ratios
  
  
• Limitation on buyer's closing costs — although the closing costs tend to be higher than conventional loans.
  
  
• Most FHA loans are 30-year fixed. But there are Adjustable Rate Loans and graduated payment programs.
  
  
• The FHA loan is an assumable mortgage, subject to FHA approval:
  
  This means another buyer can assume your mortgage if you plan to sell. This can be an added advantage in rising rate markets.
  
  
• Right to repay the loan without penalty.
  

• Link to the FHA web site for more detailed information:
  http://www.hud.gov/buying/mortprog.cfm
  

Veterans Administration (VHA) Loans:

• The Department of Veterans Affairs (VA) is a government agency set up to promote affordable home ownership for veterans. The VA does not lend money, they only insure the loan against homeowner default.
  
  
• This role allow private lenders to extend affordable housing to qualifying veterans and their families with as little as zero down.
  
  
• The interest rate on VA loans is about 1.0% lower than conventional loans.
  
  
• Loan maximum may be up to 100 percent of the VA-established reasonable value of the property. Limits apply:
  
  View the VA fact sheet on loan limitations:
  http://www.homeloans.va.gov/factsheet.htm
  
  
• VA Loans are available for eligible veterans, active-duty personnel, and surviving spouses.
  
  View VA eligibility status:
  http://www.homeloans.va.gov/eligibility.htm
  
  
• Competitive rates, with no downpayment and minimum income requirements.
  
  
• Under certain conditions, VA loans are assumable by non-veterans.
  
  

The VA Advantage:

• The big advantage of the VA program is that qualifying veterans can buy a home with zero down in most cases — subject to the veteran's entitlement.
  
  
• The "housing" and "debt-to-income" ratios are higher for VA loans — 29% for the housing ratio; 41% for the debt ratio
  
  calculate your own qualifying ratios
  
  
• Limitation on buyer's closing costs — although the closing costs tend to be higher than conventional loans:
  
  VA fees will be required at closing.
  
  
• Most VA loans are 30-year fixed rate loans.
  
  
• VA loans do not require mortgage insurance for down payments less than 20%: savings of about $50 per month.
  
  
• The VA loan is an assumable mortgage, even by non-veterans:
  
  This means another buyer can assume your mortgage if you plan to sell. This can be an added advantage in rising rate markets.
  
  
• Right to repay the loan without penalty.
  
  
• Flexibility in negotiating interest rates with the lender
  
  
• Limitation on buyer's closing costs
  
  Link to the VA web site for more detailed information:
  http://www.homeloans.va.gov/
  

Rural Housing Services (RHS):

• Affordable housing for low- to moderate-income level rural residents to purchase, construct, repair, or relocate rural-related facilities.
  
  Not subject to farmers only but to anyone who wishes to buy home in rural areas or in towns under 10,000 population (higher population levels in some areas).
  
  
• Lower or no downpayment is required in most cases.
  
  
• The Department of Agriculture works with private lenders to guarantee loans for qualified applicants. List of programs include single family housing, rural rental housing, and community facilities.
  
  Link to the RHS web site for more detailed information:
  http://www.rurdev.usda.gov/
  

• Many state and local governments provide low- to moderate financing programs to qualified candidates.
  
  
• Programs include financing, down payment assistance, closing cost assistance and other programs for first-time homebuyers.
  
  
• Programs limit loan size and the paperwork involved can be exhaustive.
  
  Lookup county and city governments for information:
  http://www.statelocalgov.net