Government-Backed Loans – VA and FHA Loans
There are some real advantages to government-backed Veteran’s Administration (VA) and Federal Housing Administration (FHA) loans. Many first-time buyers choose them because they require little or no down payment for qualified buyers.
Veteran's Administration (VA) LoansQualified veterans, including Reserves and National Guards, can take out loans with up to 100 percent financing for loan amounts up to the conforming loan limit. (Ask your Real Living Sales Professional what the current conforming loan limits are for your area.). There may be no down payment, and you can still get flexible underwriting guidelines.
With a VA loan, closing costs are regulated. Plus, VA-guaranteed loans are assumable and can be combined with second mortgages and taken on by qualified future buyers. VA loans also don’t have Private Mortgage Insurance (PMI). But the best part might just be that payments are fixed for the entire loan term so you won't have to worry about interest rate increases.
Federal Housing Administration (FHA) LoansWhile the Federal Housing Administration (FHA) doesn't technically make loans, it does make getting them easier. FHA insures loans, which encourages lenders to offer more favorable terms. The insurance protects lenders against potential losses by paying the lender if a homeowner defaults. And with an FHA loan, down payments can be as low as 3 percent.
The only requirement is showing sufficient monthly income to pay the mortgage and satisfactory credit. But remember, FHA charges an upfront Mortgage Insurance Premium similar to Private Mortgage Insurance. You can also pay a one-time charge called discount points at closing to help get a lower percentage rate. FHA loans are often assumable, too.
With so many loan options, you want to make sure you find the one that best meets your needs. And working with us and a mortgage consultant will help you understand the different options and make the best choice.