If you’re looking to purchase a home, you should know that there are other loans available besides a conventional loan. As with all loans, there are no guarantees. You still have to meet certain eligibility and criteria in order to be accepted. Here is a look at some other loans aside from the traditional mortgage loan.
VA loans are loans that help members of the service such as veterans, and their surviving spouses, become homeowners. They also offer housing programs in order to help a homeowner build or repair a home. These loans are provided by private lenders, such as banks and mortgage companies.
USDA loans are mortgages that are backed the USDA (United States Department of Agriculture) as part of its USDA Rural Development Guaranteed Housing Loan program. These loans are available to homebuyers who have below average credit. The loans offer complete financing, with reduced PMI and also offer low monthly mortgage rates. In order to meet the criteria, you must meet the USDA’s definition of “rural.” Luckily, the term is pretty flexible. Most small towns meet the definition, as well as many suburbs and cities throughout the country.
An FHA loan is a mortgage loan that is insured by the Federal Housing Administration. FHA Loans can be attractive because they offer attractive interest rates and with less stringent and more flexible qualification requirements. They are very popular with first time home buyers for this very reason. The program was originally created due to an influx of foreclosures that happened in the early 1930s. Essentially, the federal government insures loans for FHA-approved lenders in order to reduce their risk of loss if a borrower defaults on their mortgage payments. It is also one of the easiest types of loans to get, since it requires both a low down payment and you are able to have little credit, and/or poor credit.
Keep in mind, that if you can’t afford to buy a home, it isn’t the end of the world. You might need to accept the fact that you need to rent for a little longer before you can purchase your first home. Another option is a rent-to-own. Owning a home can be a wonderful experience, but be sure to wait to bite the bullet until you are fully prepared for the financial responsibility.