3 Types Of Government-Backed Home Loans

3 Types Of Government-Backed Home Loans

The three most popular government-backed mortgage loans include FHA loans, VA home loans, and USDA loans. A government-backed mortgage offers you unique benefits in comparison to conventional mortgage loans. Typically, they involve lower interest rates and easier eligibility requirements. However, these mortgages often require higher credit ratings than conventional or private loans.

At Blackmon Home Loans in Las Vegas, NV, we do everything we can to make the home buying process as streamlined as possible. Learn more about when you should choose VA, FHA, or USDA loans, as well as the pros and cons of each.

When Should I Choose FHA Loans?

While all three types of government-backed mortgages offer benefits to first-time homeowners, FHA loans require as little as 3.5% for the down payment. Additionally, they are open to all qualified buyers purchasing a primary residence. VA and USDA loans have certain restrictions that include being an active military member or veteran or purchasing homes in rural areas, respectively.

FHA Loan Pros

  • Wide Eligibility
  • Higher Debt-To-Income Allowance
  • As Little As 3.5% Down

FHA Loan Cons

  • Lower Loan Limits Lower
  • Can’t Use For A Second Home
  • Can’t Use For Investment Property

When Are VA Home Loans Better?

If you are an active member of any of the US military branches or a retired veteran, you may qualify for a VA home loan. Requirements include a minimum active service time and an honorable discharge.

Pros Of VA Loans

  • No Down Payment
  • No PMI
  • Credit Flexibility
  • Higher Allowable Debt-To-Income Ratio

Cons Of VA Home Loans

  • VA Funding Fee Increases After First Use
  • Loans Sometimes Exceed The Market Value
  • Can Only Be Used For Primary Residences

What Is A USDA Loan & When Does It Make Sense?

USDA loans are often referred to as rural loans because they are only available in specified areas. USDA mortgages come with income requirements as well as area restrictions for homes.

Pros Of USDA Loans

  • 100% Financing
  • No Assets Required
  • Lower Rates

Cons Of USDA Loans

  • Guarantee Fee (1.00%) & Monthly Guarantee Fee (0.50%)
  • Restricted Areas, Typically In Rural Areas.
  • Need Both Mortgage Lenders & The USDA Underwriting
  • Income Limits

How To Get Government-Backed Mortgages In Las Vegas

If you need assistance understanding which government-backed mortgage might work for you, the experienced lenders at Blackmon Home Loans in Las Vegas, NV are here to help. Contact us today to begin the application process or to learn more about VA, USDA, or FHA loans.

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