Bill Whitmire asked:
The purchasing of your own home has always been part of the American dream but home ownership is more difficult for some then it is for others. Fortunately there are loan programs which help those who might otherwise not be able to purchase their own homes. Many challenges can stand in the way of those families or couples desiring to purchase a home which will service as their primary residence. This article will look at the role of the FHA, VA State funded guarantee loan programs which bridge the gap for those who might otherwise be unable to purchase a home.
VA Loans
Those who have served in the military or armed forces and some qualifying surviving dependents can obtain low interest loans from the Veterans Administration. These loans are guaranteed by the US Department of Government Affairs and can be used for the purchasing of homes to be occupied as primary residences by individuals and families. Due to the fact that the income requirements and large down payments required to purchase a home were preventing veterans from purchasing homes the VA loan was established to help military personnel to access mortgage loans with better terms and conditions when purchasing a new home. A qualified VA lender can help military veterans and their families purchase their home without the need to come up with a large down payment.
State Funded Loans
Many states have programs which allow their residents to purchase homes at reduced interest rates and with a small or no down payment requirements. These programs which are often used in conjunction with federal loan programs make purchasing a home possible for those that would otherwise be unable to purchase a home for their family. Those wishing to participate in these loan programs must qualify based on income level and purchase a home within the price limits set down by the individual states. Some states only allow first time home buyers to participate in their programs, but as these programs vary from state to state it is best to check the state you will be applying to for more specific information.
FHA Loans
The Federal Housing Association also known as the FHA provides both mortgage insurance and training for prospective homeowners. Their programs are geared to address the needs of low income individuals, couples or families. FHA doesn’t directly loan the money to prospective homeowners but guarantees loans made by banks and other financial institutions. If a borrower cannot meet the lending institutions standards for large mortgage loans FHA guarantees the payment with insurance which will payoff the loan to the bank and the FHA will take possession of the property. This greatly reduces the risk to the lender. The institution that grants the loan services the loan during its term and reports statistical information back to the FHA.
Traditional mortgage loans used for the purchase of homes require borrowers to deposit up to 10% of the purchase price as a down payment. When borrowers are unable to do so FHA underwrites the loans for buyers who are able to afford the large down payment required by mortgage lenders as part of the purchase package. Until the FHA programs came about many couples and families desiring to purchase a home of their own were unable to do so because of the prohibitiveness of the large necessary down payment.
Another risk group for lenders are those whose credit-worthiness doesn’t meet the mortgage lenders standards. In this case FHA loans are used for these borrowers who do not meet standard credit approval. Credit for some can be a hard thing to establish thankfully today establishing credit has become much easier then in years past. If an individual has no credit or less then perfect credit programs such as the FHA program allow the banks to reduce the risk by underwriting the loans. Of course the amount of the loan that FHA is willing to underwrite is set down by guidelines and must be adhered to by lenders. Loan amounts that FHA is willing to underwrite can vary depending on the income level and purchase price of the property.
Jared
The purchasing of your own home has always been part of the American dream but home ownership is more difficult for some then it is for others. Fortunately there are loan programs which help those who might otherwise not be able to purchase their own homes. Many challenges can stand in the way of those families or couples desiring to purchase a home which will service as their primary residence. This article will look at the role of the FHA, VA State funded guarantee loan programs which bridge the gap for those who might otherwise be unable to purchase a home.
VA Loans
Those who have served in the military or armed forces and some qualifying surviving dependents can obtain low interest loans from the Veterans Administration. These loans are guaranteed by the US Department of Government Affairs and can be used for the purchasing of homes to be occupied as primary residences by individuals and families. Due to the fact that the income requirements and large down payments required to purchase a home were preventing veterans from purchasing homes the VA loan was established to help military personnel to access mortgage loans with better terms and conditions when purchasing a new home. A qualified VA lender can help military veterans and their families purchase their home without the need to come up with a large down payment.
State Funded Loans
Many states have programs which allow their residents to purchase homes at reduced interest rates and with a small or no down payment requirements. These programs which are often used in conjunction with federal loan programs make purchasing a home possible for those that would otherwise be unable to purchase a home for their family. Those wishing to participate in these loan programs must qualify based on income level and purchase a home within the price limits set down by the individual states. Some states only allow first time home buyers to participate in their programs, but as these programs vary from state to state it is best to check the state you will be applying to for more specific information.
FHA Loans
The Federal Housing Association also known as the FHA provides both mortgage insurance and training for prospective homeowners. Their programs are geared to address the needs of low income individuals, couples or families. FHA doesn’t directly loan the money to prospective homeowners but guarantees loans made by banks and other financial institutions. If a borrower cannot meet the lending institutions standards for large mortgage loans FHA guarantees the payment with insurance which will payoff the loan to the bank and the FHA will take possession of the property. This greatly reduces the risk to the lender. The institution that grants the loan services the loan during its term and reports statistical information back to the FHA.
Traditional mortgage loans used for the purchase of homes require borrowers to deposit up to 10% of the purchase price as a down payment. When borrowers are unable to do so FHA underwrites the loans for buyers who are able to afford the large down payment required by mortgage lenders as part of the purchase package. Until the FHA programs came about many couples and families desiring to purchase a home of their own were unable to do so because of the prohibitiveness of the large necessary down payment.
Another risk group for lenders are those whose credit-worthiness doesn’t meet the mortgage lenders standards. In this case FHA loans are used for these borrowers who do not meet standard credit approval. Credit for some can be a hard thing to establish thankfully today establishing credit has become much easier then in years past. If an individual has no credit or less then perfect credit programs such as the FHA program allow the banks to reduce the risk by underwriting the loans. Of course the amount of the loan that FHA is willing to underwrite is set down by guidelines and must be adhered to by lenders. Loan amounts that FHA is willing to underwrite can vary depending on the income level and purchase price of the property.
Jared
