3 Loan Programs For Home Buyers
Are you thinking about buying a home? You may find yourself overwhelmed by the entire process. There are several steps that you need to go through and multiple parties involved throughout it all. Luckily, some programs can assist with it to make everything easier – or cheaper – for you. One of the main parts of buying a home involves getting a loan to help cover the cost of the property. Mortgage lenders, financial institutes, and other organizations offer home loans and other types of loans for those who qualify. This guide goes over the kinds of loans that people can apply for and which ones might work best for you.
1. VA Loan
This loan is a home loan granted by lenders and guaranteed by the United States Department of Veteran Affairs. You can qualify for this loan if you are:
Veteran of military
National Guard or Reserve member
Widow of eligible military member
VA loans are a great option if you qualify because they do not require a down payment like other home loans. The interest rates are also significantly lower when compared to other mortgage loans. The VA loan can be used for buying a preexisting structure, building a new home, renovating a residence, buying a land lot, and refinancing mortgages.
2. USDA Loan
The USDA loan is a program offered by the United States Department of Agriculture. It is designed for people living in rural areas. The loan requires no down payment and is guaranteed by the government agency in case you aren't able to pay it back to the lender. It comes with a very low mortgage payment and low-interest rates. USDA loans have income requirements and are aimed towards people with low income. There are other requirements as well, like credit score and proof of ability to pay the loan payments each month. You can use the USDA eligibility site to determine whether or not you qualify for the loan.
3. FHA Loan
The FHA loan is another government back loan for people with low incomes. Unlike standard mortgages that ask for 20% of the purchase price for a home as the down payment, this program only asks for 3.5% of it. People with lower credit scores may be required to pay a down payment of 10%. Utility and rent payments can also be used to establish a good credit with the program if you have no previous credit prior to applying for the FHA loan. Anyone who needs an FHA loan will have to have mortgage insurance, have no bankruptcy within the previous two years, have zero foreclosures within the last three years, and have proof of steady income for several years.
Once you determine which loan is for you, you can visit the lender of your choice and begin the application process. The lender will help you gather all the necessary documents and proof that you need to check eligibility for the program of your choice.