Government Loan Programs Help Today’s Homebuyers
Darnell K. Souza
Mortgage Loan Originator
Compass Home Loans, LLC
When the Federal Housing Administration (FHA) was created by Congress in 1934, its primary purpose was to stimulate economic growth during the Great Depression by helping people through affordable homeownership.
During this time, the U.S. was primarily a nation of renters. Only about 4 in 10 American households consisted of homeowners. The low percentage of homeownership was the result of several factors: 1) Loan terms for homebuyers seeking mortgages were difficult to meet. 2) Mortgage financing was limited to 50 percent of the property’s market value, with a repayment schedule spread over three to five years and ending with a balloon payment. 3) Lack of households with excess liquid funds to use for a down payment.
By providing lenders with sufficient insurance for lower down payment options, the FHA program had a substantial impact on homeownership rates and housing until the present day.
Subsequently, what we know today as the USDA’s Rural Development Loan Program and the VA Home Loan Program were developed. The USDA program assists approved lenders in providing low to moderate income households the opportunity to purchase a primary residence in eligible rural areas with minimal or no down payment required. The VA Home Loan Program allows for low or no down payment requirements to qualifying veterans toward their home purchase.
So why is it important to know this brief history of these home loan programs? As we learned in history class, if we pay close attention to the past, we may utilize that information to make better, more informed decisions today. The FHA, VA, and USDA (RD), also known as government-sponsored home loans, were created by the U.S. government to increase the percentage of households who own their homes. These programs are still available to homebuyers today.
How do these programs help our families today get into homes they can afford? The government knows very well that many families may not have extra liquidity or cash lying around to put toward a down payment. Additionally, they may not offer a perfect credit background. Often these buyers are still able to afford a housing payment. The three government loan programs offer minimum-to-no down payment requirements to potential homebuyers. They provide families the confidence they need in establishing pride in homeownership. Some of the primary advantages of a government home loan are:
VA & USDA 0% down, low interest rates, flexible income & credit qualifying.
FHA3.5% down, low interest rates, flexible income & credit qualifying.
You may qualify for one of the three government homeloan programs and not know it. Certain restrictions do apply, but that’s why it is important to work with someone who specializes in all government home loan programs. A knowledgeable, licensed professional can carefully guide you through the process of selecting the right program for you.
Compass Home Loans, LLC, is a leader in government home loans. Our loan officers have over 300 years of collective experience and take pride in finding the right financing option for our borrowers including government loan options. For nearly 30 years, I have personally specialized in government home loan programs. Through the many cycles of our housing industry, these programs have been instrumental in successfully helping countless numbers of families achieve their dream of homeownership. If you would like to learn how to take advantage of these options, give us a call to schedule a free consultation and let us walk you through the home loan process and share information on the best programs for your situation.
Please contact us at (808) 518-3650 or visit our website at www.compasshawaii.com.