Government loan programs
USDA Loans
USDA Loans have been around for a long time. The popularity of this program has skyrocketed since Fannie Mae/Freddie Mac eliminated their 100% financing programs. Frankly USDA should have been the loan of choice during the boom (USDA is not allowed to market straight to borrowers, this is the main reason it was not the loan of choice).
There are certain restrictions on Rural Housing Loans. Portland, South Portland and the majority of Bangor are excluded. There are small slices of Lewiston, Biddeford and Westbrook that are ineligible so please check with us before making an offer.
There are income limits on the program as well. Income limits are determined by household size. The limits increase for a family of 5+. Please check with us so we can calculate your income accurately.
The benefits of USDA are low rates and low monthly mortgage insurance. Like FHA and VA, there is an UpFront fee (Guarantee Fee).
FHA loans
An FHA loan is insured by the Federal Housing Administration, a federal agency within the U.S. Department of Housing and Urban Development (HUD). The FHA does not loan money to borrowers, rather, it provides lenders protection through mortgage insurance (MIP) in case the borrower defaults on his or her loan obligations. Available to all buyers, FHA loan programs are designed to help creditworthy low-income and moderate-income families who do not meet requirements for conventional loans.
FHA loan programs are particularly beneficial to those buyers with less available cash. The rates on FHA loans are generally market rates, while down payment requirements are lower than for conventional loans.
Some of the other benefits of FHA financing:
- Only a 3.50 percent down payment is required
- Lower monthly mortgage insurance premiums
- More flexible underwriting criteria than conventional loans
- Loans are assumable to qualified buyers
VA Loans
VA guaranteed loans are made by lenders and guaranteed by the U.S. Department of Veteran Affairs (VA) to eligible veterans for the purchase of a home. The guaranty means the lender is protected against loss if you fail to repay the loan. In most cases, no down payment is required on a VA guaranteed loan and the borrower usually receives a lower interest rate than is ordinarily available with other loans.
Other benefits of a VA loan include:
- Negotiable interest rates.
- No monthly private mortgage insurance requirement.
- Right to prepay loan without penalties
- The Mortgage can be taken over (or assumed) by the buyer when a home is sold.
- Counseling and assistance available to veteran borrowers having financial difficulty or facing default on their loan.
Although mortgage insurance is not required, the VA charges a funding fee to issue a guarantee to a lender against borrower default on a mortgage. The fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount.
Veterans can apply for a VA loan with any mortgage lender that participates in the VA home loan program. A Certificate of Eligibility from the VA must be presented to the lender to qualify for the loan.
We are very happy to be able to offer all Government programs. Please contact us if you have and additional follow up questions.