There are plenty of mortgage loans and government-insured ones are one of the most popular. When applying for your mortgage, your lender will provide you with plenty of options including bank statement mortgage loans.
If you are eligible for a government-insured loan, also known as a government-backed loan, you should consider applying for it.
Such loans are backed by the government as a guarantee that if you default your mortgage payment, the bank will receive repayment. The mortgage plans include the following;
· VA Loans
This loan is available to qualified veterans. The Veterans Administration gives 100% financing for 0% down payment. This loan may also be available to qualified spouses of military members.
· USDA Loans
This loan is available for home buyers with low or moderate income. It is mostly available for people buying homes in rural areas. The home buyers may get u to 100% financing if they are buying a primary residence.
· FHA Loan
You can apply for FHA loans from specific lenders. You can only get them from FHA-approved lenders. The requirements for these loans are very lenient.
The down payment is 3.5% which is a lot lower than other loans. You can get the loan as long as you meet the loan requirements, and you are using the mortgage loan to refinance or buy a primary residence.
The fact that it is popular with first-time homebuyers has made it earn the nickname ‘first-time homebuyer loan.’
Advantages of Government-Insured Loans
Government-backed loans have plenty of advantages. They include the following.
Qualification is Easy
Qualifying for the loans is much easier than conventional loans. If you are a homeowner with financial challenges, they are a perfect choice.
Most lenders may fail to give you a loan because they are unsure of your ability to repay the loan. With government-insured loans, that risk is eliminated as the government secures your loan.
These loans make it easy for you to get your home even with a high debt-to-income ratio.
Low Down Payments
Before getting your loan, lenders expect you to make a down payment as a guarantee that you will repay the loan. With government-backed loans, the down payments are very low.
This is because the lender’s risk is reduced. With USDA and VA, you do not need to make any down payment. For FHA, the down payment is only 3.5%.
You Can Build Your Finances
Buying a home using government-insured loans gives you a chance to strengthen your finances. It allows you to build equity and credit which may provide you with plenty of financial opportunities.
It may help you when you need to purchase other assets such as cars.