Government Assistance Mortgage

From LoveToKnow Mortgage

Government assistance mortgage programs are available to help people become homeowners as well as to help homeowners with their mortgage payments.

Mortgage assistance is available for many types of home loans.

Types of Assistance Offered

There are many types of assistance offered to homebuyers. Programs offer everything from reduced down payments to special loan guarantee programs. Some programs even offer reduced interest rate mortgages.

Grant Programs

A grant is an amount of money that is paid to the homeowner. The grant could be money to help with down payment assistance or it could be money for short-term help to pay a month or two of mortgage payments.

The grants are usually provided by governmental agencies and are designed to help lower income individuals become homeowners. For example, the United States Department of Housing and Urban Development (HUD) funds several types of grant programs each year. HUD does not directly provide the money to the homeowners. Instead, the money is provided to local governments and nonprofit organizations that administer the grant programs.

Special Qualification Assistance

Some government assistance programs are designed for applicants who meet special qualifications. For example, HUD has several loan guarantee programs that allow low income home buyers to get mortgages with low down payments. These programs are often targeted to help specialized groups of homebuyers such as:

Native Americans – The Section 184 HUD loan guarantee program is designed to provide mortgage assistance to Native Americans so they can purchase and repair homes on their native land.
First Time Homebuyers – HUD offers mortgage down payment assistance to first-time homebuyers who have annual incomes within a qualifying range. The money is usually administered through mortgage lenders to qualified applicants. Not all states provide this program. Other states may offer special tax deductions for first-time homebuyers.
Veterans – The Department of Veteran Affairs offers loan guarantee programs for veterans allowing them to purchase homes with no down payment. As with other loan guarantee programs, the loans are made by banks or mortgage companies but the VA guarantees that the lender is protected against loss if the homebuyer defaults on the loan.

Not Free Money

Government assistance mortgage programs are not designed to be free money. They are special funds that are set aside in Federal programs to make it easier for a lower income individual to quality for a home mortgage. The homeowner does not necessarily receive actual funds in the form of a check. Instead, the homeowner receives special benefits such as a lower down payment, or a lower interest rate, or the ability to qualify for a mortgage with a lower income.

These benefits are provided by lenders who, in turn, have received a guarantee from the government that the lender will be compensated if a homeowner defaults on any of these specially-designed mortgages.

How to Apply

Each mortgage assistance program has its own set of qualifications. Some programs require a certain income level. Other programs are designed for specific groups of homebuyers such as single mothers or fire and police personnel. In addition to special qualifications, some programs have been established to only provide assistance up to a certain number of mortgages or to a certain amount of total mortgage dollars within a year.

These special mortgage programs are offered through mortgage lenders. The lender will be able to give you information on the qualifications for each program as well as information on how to apply.