Government Home Loans - FHA And VA

A Hope To Buy A House Despite Poor Financial HealthGovernment home loans assist people who aren't able to save a sufficient amount for their mortgage to become property owners in their own right. Such loans come primarily in the form of funding from bodies such as the Federal Housing Administration and the Veteran Administration (VA). The great thing is that government home loans are secured by the federal government.

Let's have a closer look at both the Federal Housing Administration and the Veteran Administration home loans.

Federal Housing Administration Loans

These Government home loans are provided under the auspices of the United States Department of Housing Urban and Development. Although it has been adapted recently to be more inclusive, the Federal Housing Administration (FHA) loan was originally developed in the 1990s to help first time buyers get their first leg up on the "property ladder." These have really been a great help to families on low incomes and assist them out of the trap of paying rent and while having no property ownership afterward to show for all their money spent.

FHA loans are administered by the usual home loan lending institutions. However instead of the usual ten-to-twenty percent down payment required to secure the mortgage, with an FHA loan, it is more typical to require only a three percent down payment, which is obviously more affordable.

These days as house prices skyrocket, one hundred percent government home loans have also been made available from some mortgage lenders. Beware, though, since for this type of loan there is usually an additional closing cost. So you need to be careful you actually are getting a good deal and not simply paying out in closing costs what you'd otherwise pay in a down payment.

Veterans Administration Home Loans

As you might expect, only veterans and their spouses are eligible for these Veterans Administration (VA) loans, which make one hundred percent financing possible. No closing costs or down payments are required.

Both of the above types of government home loans can only be used for a limited payment on a house, depending on where you seek to purchase property and the state of the housing market in that area. What makes the softer limits of the Veteran Administration home loans different is that they can be used to buy several properties; that is, you can buy several at one time or over a period of time so as long as you stay under mandated limits. VA loans can even help you become a property developer!

So government home loans can help you buy a house despite poor financial health, and they also allow you to branch into making property purchases a small business, which is not an option people often consider.

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