The 2 primary Government Loan Programs are FHA & VA. Here are brief descriptions of these 2 programs.
FHA loans
An FHA loan is insured by the Federal Housing Administration, a federal agency within the U.S. Department of Housing and Urban Development (HUD). The FHA does not loan money to borrowers, rather, it provides lenders protection through mortgage insurance (MIP) in case the borrower defaults on his or her loan obligations. Available to all buyers, FHA loan programs are designed to help creditworthy low-income and moderate-income families who do not meet requirements for conventional loans.
FHA loan programs are particularly beneficial to those buyers with less available cash. The rates on FHA loans are generally market rates, while down payment requirements are lower than for conventional loans.
Some of the other benefits of FHA financing:
- Only a 3.5 percent down payment is required.
- Seller can credit up to 6% of Sales Price toward your closing costs.
- More flexible underwriting criteria than conventional loans
- FHA limits the amount lenders can charge for some closing cost fees (e.g. the origination fee can be no more than 1% of mortgage).
- Loans are assumable to qualified buyers.
- Current FHA loan limit in San Joaquin County - $448,500
VA Loans
VA guaranteed loans are made by lenders and guaranteed by the U.S. Department of Veteran Affairs (VA) to eligible veterans for the purchase of a home. The guaranty means the lender is protected against loss if you fail to repay the loan. .
Other benefits of a VA loan include:
- No Down Payment required up to $510,400 purchase price*
- Certain fees are not allowed to be paid by the veteran (Seller Typically pays them) - VA "Non-Allowables"
- Seller is allowed to pay ALL of Veteran's remaining closing costs
- No private mortgage insurance requirement.
- Right to prepay loan without penalties
- The Mortgage can be assumed by another Veteran buyer when a home is sold.
- Counselling and assistance available to veteran borrowers having financial difficulty or facing default on their loan.
Although mortgage insurance is not required, the VA charges a funding fee to issue a guarantee to a lender against borrower default on a mortgage. The fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount.
A VA loan can be used to buy a home, build a home and even improve a home with energy-saving features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/caulking, storm windows/doors or other energy efficient improvements approved by the lender and VA.
*Closing costs and fees may apply.
We are considered to be specialists with VA Loans in the Central Valley...Bob Morris is is a Navy Veteran, has used his VA loan more than once and has assisted dozens of Veteran buyers/borrowers with their VA loans.
Ask about the "VA NO-NO"...Call (209) 470-7161 or complete the form below.
