What Types of Government-Backed Loans Are Available?

What Is a Government-Insured Loan?

A government-insured loan is insured by the federal government. The backing agency protects the lender, even if you can’t repay the debt, by insuring the loan amount. When shopping for a government-insured loan, we’ve provided three different types below. In some instances, these programs can help you qualify for a mortgage.

FHA Loans: Insured by the Federal Housing Administration, FHA loans are more accessible than the other two types of loans. The down payment amount depends on your credit score, and you must pay an upfront premium of 1.75% of the loan amount plus an annual premium up to 1.05% of the loan amount.

USDA Loans: Backed by the Rural Development Guaranteed Housing Loan Program, these loans are limited to low- and moderate-income borrowers. No down payment is required, and the upfront mortgage premium is 1% and the annual premium is 0.35%.

VA Loans: These loans are the most restrictive government-backed loans since you must be an active-duty service member, veteran, spouse of a veteran, or a U.S. citizen and served in the armed forces during World War II. You don’t need a minimum credit score to qualify, and you can finance up to 100% of the loan. They have an upfront funding fee, which varies depending on the size of your down payment.

Depending on your situation, you might qualify for more than one loan. To receive more information about government-insured loans, reach out to a trusted mortgage lender.

Sources:Investopedia.com, Experian.com, Bankrate.com