Government Mortgages

The U.S. government supervises an array of agencies involved in offering mortgages to the public.  The mortgages issued by these government agencies are called government loans (all other varieties of mortgage loans are known as conventional loans).  The most common kinds of government loans are Federal Housing Authority (FHA) loans and Veterans Administration (VA) loans.

• FHA loans: An FHA loans is not actually a loan.  On the contrary, it is an insurance policy on a conventional loan.  The purpose is to tempt private lenders to lend to borrowers who would likely not be approved for a mortgage loan otherwise.  To determine if you qualify for an FHA loan, visit http://www.hud.gov/fha/loans.cfm
• VA loans: The government issues 100% financed loans (no down payment is required) to honorably discharged veterans, enlisted service personnel with at least 181 continuous days of active duty, spouses of veteran that died in service, National Guard and Reserves personnel with at least six years of service.  The VA loans facilitate veterans to be able to get a mortgage without a down payment or private mortgage insurance.  To check the requirements of eligibility for a VA loan, visit www.homeloans.va.gov

Should You Get a Government Loan?

There are many attractive features associated with government loans, including lower down payment obligations and smaller interest rates as compared to conventional loans.  Conversely, there are limitations on the total amount that you can borrow, require longer to process, and have strict prerequisites on eligibility.  If you do qualify for an FHA loan or a VA loan, you may still contemplate a conventional loan since the process is usually faster and easier to deal with a private lender- i.e. any lender not associated with the government.