Government Backed Home Loans - Low Income
FHA and VA Home Loans
There are two types of government home loans. One is the FHA (Federal Housing Administration) program; the other comes courtesy of the Department of Veterans Affairs, otherwise known as VA Loans. Both are discussed below:
VA home loans
Home loans arranged through the Department of Veterans Affairs are designed to help veterans purchase a property. They work by guaranteeing a veteran’s mortgage repayments, thereby reducing or eliminating any risk that the applicant may pose to the home loan provider. This in turn means that lenders are more likely to offer borrowers good repayment terms and low interest rates on the loan.
This loan can be of great support to families of veterans who have a limited deposit at their disposal, or for those veterans ho have accumulated significant debts or who perhaps have a less appealing credit history.
They are available for up to 100% of the total value of your property, subject to an appraisal to a maximum of just over $200,000. This is calculated by multiplying the current VA eligibility entitlement by four.
Other benefits are that the VA home loans have zero insurance premiums and require no down-payment.
FHA home loans
This type of government home loan is available to everyone, regardless of profession. Like the VA loans, the aim of this program is to help people who would otherwise have had difficulty in purchasing property become homeowners. They are designed for borrowers struggling to gather together cash for a deposit, and for those who are on a low-income and are experiencing difficulties in applying for a regular mortgage loan. The total amount you are able to borrow depends largely on where you live, as well as other economical variables. Go to our FHA Home Loans page for more information on this.
To qualify for a Federal Housing Administration Loan, you must be credit-worthy. This means having a good credit history and manageable current debt. For more information on home loans for bad credit, click here.
Borrowers are required to find three percent of the down-payment on the property, and are also obliged to cover the closing cost fees of the mortgage. This has been capped by the FHA at one per cent of the total home loan amount).