Government and Legal Aspects of Mortgages 2
[Continued from: Government / Legal, Part 1]Federally Supported Mortgage Programs
There are a number of mortgage programs that are insured or funded by the United States government, including VA, FHA and FmHA mortgages.Department of Veterans Affairs
Department of Veterans Affairs (VA) mortgages are insured, but not issued, by the United States government. They are designed to help eligible veterans and their spouses purchase homes.To be eligible for a VA loan, you must have served on active duty in the Army, Navy, Air Force, Marine Corps, or Coast Guard and have been honorably discharged after either 90 days or more, any part of which occurred during wartime, or 181 continuous days or more during peacetime.
To qualify for a VA loan, you must have a certificate of eligibility, proving your military service; complete VA Form 26-1880 to request this certificate. Unless the home is over certain limits, no down payment is required.
Federal Housing Administration
Federal Housing Administration (FHA) mortgages are administered by the Department of Housing and Urban Development (HUD). They are insured, but not issued, by the United States government and include easier credit qualification, down payment, and underwriting standards than conventional loans.Your payment cannot exceed 29% of your gross monthly income and your total debt should not be more than 41% of your gross income; you can get an FHA loan with as little as 3% down. This is in contrast to the 26-28% and 33-36% required to qualify for standard mortgages.
HUD collects mortgage insurance payments from borrowers and promises lenders full payment if the borrower defaults.
To qualify for an FHA loan, you must have good credit and enough income for the payment.
Federal Farmers Home Administration
Federal Farmers Home Administration (FmHA) mortgages are financed and insured loans to farmers and other qualified borrowers for rural housing and other purposes. They are funded by government subsidies and the money is distributed to local offices quarterly.To qualify, the property needs to be one acre or less, and there are low selling price limits, determined locally. The program is designed for low-income borrowers who can't get financing elsewhere.
Applications are made to the local office, and once someone is approved, they are informed when the funds are available.
[Continued: Government / Legal, Part 3]