Federal Home Loan Options

In all but a few cases, there is no such thing as a direct federal home loan. With both the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA), a federal home loan is actually a guarantee on a private loan. Even though these are not direct loans, they can still make home ownership more affordable.

FHA Options

The FHA works with qualified borrowers who may need additional assistance securing a mortgage. For example, a first-time home buyer with great credit and a solid income may not have a sufficient down payment. An FHA guarantee can provide the borrower the option to purchase with as little as 3.5 percent down. The FHA promises to purchase the loan out of default if the borrower cannot continue payments.

VA Options

The VA extends benefits only to veterans and surviving spouses. VA loans, like FHA loans, are actually guarantees from the government to cover the loss on a private mortgage if the borrower cannot pay. Also like FHA loans, VA loans are extended to credit worthy borrowers who simply need assistance making the loan more affordable. If you are a veteran or surviving spouse, take advantage of the VA option as part of your total VA benefits package.