Federal Housing Administration mortgage loans These mortgages, administered by the U.S. Department of Housing and Urban Development (HUD), are government-insured loans that offer very low down payments, which may be borrowed from relatives. Rates are often lower, and qualifying is easier because credit is not as large a factor. These loans are often assumable, meaning you can take them over from the previous owners or allow a buyer to take it over from you. Refinancing is easier, and there are other products and services available. There is, however, a cap on how much can be borrowed. Processing may take longer and appraisal guidelines may be strict; the house must be worth the selling price. FHA mortgages are not restricted to first-time borrowers.
U.S. Department of Veterans Affairs (VA) Home Loan Guaranty Service VA mortgages are government-guaranteed loans available to veterans of the armed services, those currently on active duty or in the reserves, and widows or widowers of veterans. Like FHA loans, VA loans have guidelines that allow more people to qualify. In addition, some VA loans require no downpayment at all. There are limits on the size of VA loans, but usually they are large enough to cover the purchase of moderately priced homes across the country. VA-guaranteed home loans are made by private lenders. The guaranty means that VA will protect the lender against loss if the veteran or a later owner fails to repay the loan.
Reverse mortgages (Home Equity Conversion Mortgages) Designed specifically for older borrowers who have substantial equity in their homes, this type of mortgage can be used to increase the monthly income of retired or elderly borrowers. It enables them to use the equity in their home without selling or moving. The owner receives a monthly payment that slowly reduces the equity. However, the loan must be repaid if the borrower sells, moves, or dies, which may reduce the value of equity available to heirs.
Housing Authorities There are national non-profit organizations dedicated to assisting homebuyers with their down payment and closing costs. Housing authorities are agencies in cities and states around the nation that handle housing issues in their designated areas. Many housing authorities strive to provide stable and affordable housing for low and moderate income persons and create living environments that help residents learn to live independently. Your mortgage broker is educated about current housing authority issues and can serve as a liaison between you, the borrower, and your Housing Authority.