(NationRise.com) – Federal loan opportunities are vital to the financial income of lower income Americans. Without federal loans, we’d struggle to qualify for reasonable interest rates and find greater difficulty entering the home buying market, among others. Federal loans tend to provide lower fixed interest rates, income-based repayments, lower FICO score requirements, and greater affordability.
Here’s the scoop on several available federal loan programs to aid you in scoring the best loan for your needs.
Federal Housing Administration (FHA) Loans
The Federal Housing Administration insures FHA loans. These loans are designed for low and moderate income families hoping to acquire a loan. FHA loans help you get financed for up to 96.5 percent of the value of the home.
To be eligible for an FHA loan, you need to meet some critical requirements, such as having 3.5 percent down payment if you have a 580 minimum FICO score, or 10 percent down if your FICO score is 500 – 579. Additionally, an appraiser approved by the FHA has to provide an evaluation of your desired home. It has to be your primary residence — it can’t be a second home or an investment property — and you need to move into the new home within 60 days of closing on it.
You must have a debt to income ratio of 40 percent or less as well as the standard proof of steady income and employment. Lastly, the value of your home has to fall within the FHA mortgage limits for your particular region.
The FHA itself doesn’t provide home loans; it backs them. You have to go through a financial institution approved by the FHA to apply for such a loan.
Section 504 Home Repair Program Loans
Have you ever heard of the Single-Family Housing Repair Loans & Grants? Those are Section 504. These loans are reserved for very low income homeowners and the elderly, and they’re meant to remove health and safety hazards from a home, or to provide major improvements, repairs, and modernizations.
To qualify for Section 504, you have to own the home and reside there and you must not be able to get financing elsewhere. You’ll also need to reside in a rural area with a household income qualifying as a very low limit. You’ll need to be 62 years of age or older. To get a grant, the repair cost must be greater than your assets.
Veterans Affairs (VA) Loans
VA loans are home loans made exclusively available to active duty service members, veterans, and their families to buy, upgrade, refinance, or build a home.
To qualify for a VA loan, you have to have minimum of six years of service in the National Guard or Reserves, a minimum 90 days of service in active duty, and minimum of 181 days of active service during a time of peace. You must have served at least 90 days per Title 32 or Title 10, and 30 of those days must be consecutive. Lastly, you can qualify if you are a spouse of a service member who passed away due to a service-related disability or in active duty. If you are the service member, you must not have been dishonorably discharged.
If you qualify for a VA loan, you have to receive a Certificate of Eligibility, or COE, from the VA. This is what you take to lenders, as the VA doesn’t provide the loans, merely ensures an applicant is qualified and distinguishes approved lenders.
If you are struggling to find the means to get a loan, check out these loan opportunities as well as Farm Labor Housing Loans, Rural Homeownership Direct Loan Program Loans, Student Direct PLUS Loans, and 7(a) Small Business Loans.
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