If you are low income and looking to purchase a home, applying for a government loan or program can help make purchasing a home easier for you. Options include VA Home Loans, USDA Home Loans and Fannie Mae Home Loans. Learn more about each of these government-backed loans below.
VA Home Loans
The first type of government program we will talk about is VA Home Loans. VA home loans are provided by the Department of Veteran Affairs (VA) to help veterans and the surviving spouses of veterans afford a new home. VA home loans are not provided directly by the Department of Veteran Affairs, rather the VA becomes the guarantor of the eligible veteran or surviving spouse so that they are able to receive a loan from a lender with more lenient terms and conditions.
These terms can include lower interest rates on monthly mortgage payments or being allowed to give a lower down payment than required. This is especially helpful for low-income families or veterans and surviving spouses with bad credit because it allows them to receive loan opportunities they may not have been able to get before.
USDA Home Loans
The U.S. Department of Agriculture’s (USDA) Rural Development department provides USDA home loans to low income individuals living in rural areas. USDA home loans only apply to those seeking housing in rural areas, as the intent of this government program is to help develop and support families in rural areas.
The USDA provides programs such as the Single Family Housing Guaranteed Loan Program in order to help connect approved lenders with lower income families struggling to find safe and stable housing in rural areas. This program finances 100 percent of all expenses needed to purchase, modify or build a home for eligible families in participating rural areas. Families will also not be required to pay a down payment for their new dwelling funded by the USDA’s loan program.
Eligible participants will need to be looking for housing in a participating rural area, meet the federal government’s income requirements for low income and be a citizen or legal resident of the United States.
Fannie Mae Home Loans
Fannie Mae, also known as the Federal National Mortgage Association,is a government-sponsored enterprise that helps provide mortgage assistance to borrowers by allowing lenders to reinvest their mortgage assets into the market.
For examples, if a house is in foreclosure and the lender has lost money on the home mortgage, they can re-introduce the home into the market for a lower price through Fannie Mae and earn at least some of their remaining loan amount back if not all of it.
Fannie Mae offers loan opportunities such as the HomeReady Mortgage, which offers low down payment options to low-income and low-credit families looking for housing in low-income areas. The HomeReady program helps both first-time home buyers as well as repeat homebuyers who meet the low-income and low-credit requirements.If you need help looking for Fannie Mae eligible properties, you can download the HomePath app to help you identify eligible property.
In the following slide we will discuss one of the most prolific government backed home loan options, FHA Loans, and how to apply.