Buying a home is considered to be the American Dream. In difficult economic times, however, that dream doesn`t always become a reality. Luckily, there are several government programs in place to help struggling buyers purchase a home, paving the way to home-ownership for those that never believed it possible.
Federal Housing Administration (FHA)
FHA mortgages are offered by HUD, the U.S. Department of Housing and Urban Development. This means that they are offered by the government itself, providing borrowers with very low down payment offers. These mortgage rates are also lower than average, with an easier qualification process that doesn`t consider credit as much of a factor, as with most traditional loans. In addition, they`re not restricted to first-time home-buyers.
Another great thing about FHA loans is that refinancing is easy, but they do come with a couple of downsides. For one, processing and appraisal may take longer because the house must be sold at the price it`s worth. There is also a cap on how much a person or couple can borrow.
USDA Rural Development Housing & Community Facilities Program
Looking to purchase property in the country? The government has set up a program for low- to very-low income home-buyers in rural areas under the umbrella of the Rural Housing Service (RHS). This service also provides financing opportunities to the disabled, the elderly, or lower-income residents living in multi-unit housing as a way of helping them pay rent.
Not just anyone can qualify for this assistance, but if you`re a farmer or living on a very low income in a rural area, it`s worth checking into.
U.S. Department of Veterans Affairs Home Loan Guaranty Service
VA government loans are available for military service members. Whether you`re currently on active duty, a member of the reserves, a veteran, or a widow or widower, these government-guaranteed loans are designed for you.
Similar to FHA loans, VA mortgage guidelines are less strict than traditional loans so more people can qualify. Many of these loans don`t even require a down payment and they are generally large enough to purchase a moderately-priced house. Keep in mind, however, that there are limits on the size of these loans and the loans are serviced by private lenders backed up by the government guarantee.
The HUD HOME Program
The HOME program works on a local level and isn`t available to just anyone. HUD provides grants to states and communities that then decide how best to use the funds. Working with local nonprofits and affordable housing efforts, the lowest-income residents may he assisted on the path to home-ownership.
There is no one way to define eligibility for the HOME program since each community deals with it differently, but most families benefiting from rental assistance must not make more than 60% of the local median family income. Other local programs may exist in your area, so take the time to research opportunities at every level.
Closing on a home is one of the most exciting times in every adult life and these programs make it easier than ever to make that dream a reality. Money management and budgeting after closing are imperative if you wish to avoid losing that home, so consider visiting Money Tips to discover ways to stay on track with your finances.