What is a Government Mortgage?
A government mortgage refers to FHA and USDA mortgages.
FHA
FHA does not actually make mortgages, rather they insure them assuming the loan meets their guidelines. With a conventional loan, if you put less than 20% down you pay Private Mortgage Insurance or PMI. With an FHA mortgage, the government replaces the private insurer and FHA actually insures the mortgage that the lender makes. Think of FHA as government mortgage insurance.
Many people mistakenly think that FHA is a first-time buyer product. While it might be true that many first-time buyers utilize FHA financing, you don’t need to be a first-time buyer to take advantage of an FHA mortgage.
FHA has a minimum down payment requirement of 3.5% and their mortgage insurance premiums are not impacted by credit score. FHA also imposes a maximum loan amount, which currently stands at $308,200 in the Kansas City metropolitan area. FHA allows for lower credit scores compared to its conventional counterparts and FHA allows faster reentry to the mortgage market for people who have experienced financial difficulties such as bankruptcy, foreclosure or short sale.
FHA also has a fantastic renovation product known as a 203K mortgage, as well as a fantastic streamline refinance program. FHA also has products for manufactured housing and condominiums.
USDA
And, just like the aforementioned FHA mortgage, USDA also insures mortgages for borrowers who meet their guidelines and property requirements.
Expand your horizons with the USDA Guarantee Rural Housing Program offered by Flat Branch Home Loans. This program is a great way for you to finance a new home or refinance your current home.
USDA Purchase Loan benefits include:
- 30-year fixed rate
- Self-employed income accepted
- No maximum loan amount
- No reserve requirements
- 620 minimum FICO score
- 100% financing/no down payment up to the appraised value of the property
Eligible properties must be located in a rural area as defined by USDA Rural Development and cannot produce income.
USDA Refinance Program
To cultivate the BEST loan possible based on today’s low interest rates, now may be the perfect time to refinance your current USDA loan with the Refinance Program.
Requirements:
- Be a current Section 502 Guaranteed loan borrower
- Meet the applicable adjusted income eligibility limit
- Reside in an eligible rural area, or an area that was eligible at the time of original loan closing
- Have made timely mortgage payments for the previous 12 months at the time of loan application
