Updated: Apr 30, 2020
Finding a home loan that fits your budget can be difficult. You may not have enough money saved for a large down payment or a high enough credit score to qualify for some loans, but don’t fret, government loans are here to rescue you. These types of loans may actually help you land a dream home without the hassle of paying a large sum of money.
Thanks, Uncle Sam
The three main types of government-backed loans are FHA, VA and USDA. Thanks to these loans, you may not need an excellent credit score and high down payment to buy a home. The government guarantees repayment if you default (let’s hope you don’t) on your mortgage payment. This makes it easier for you to qualify for these loans.
FHA: The “I don’t have a lot of money for a down payment” loan
This loan may be perfect for homebuyers looking to qualify for a low down payment, better rates and lower credit requirements. It’s extremely popular with first-time homebuyers.
VA: The “I’m a Military veteran or am actively serving” loan
If you’re an eligible veteran searching for no down payment and low rates, then this loan is for you. It serves those who serve our country.
USDA Rural Development: The “I want to live in a rural area” loan
Live in a rural community? USDA makes it possible for you to have no down payment with affordable mortgage insurance in the form of a guaranteed fee.
The benefits of government loans
It may be easier to qualify: Since these loans are secured by the good ole’ government and removes the risk of nonpayment, you can access these loans without having to have a more-than-stellar debt-to-income ratio.
It may have a low or no down payment option: Without the risk of nonpayment, you may be able to qualify for these loans with as little as 3.5 percent down on FHA loans and no down payment for VA and USDA options. No or low down payment means more money in your pocket for other home buying fees.
Strengthen your financial status when you buy: Take advantage of government loan perks of low down payments and lower credit scores. You’ll build your credit and equity as a homeowner. Keep smart credit habits and enter future financial endeavors with a breeze.
Every loan has its pros and cons and it’s up to you to figure out which one is right for you. If you find yourself stressing over having a low credit score or the possibility of having a high interest rate, a Movement loan officer would love to help you explore the government-backed loan options. Find a loan with Movement Mortgage.