It's a good idea to research federal home buying programs for which you might qualify if you're thinking about purchasing a home.
The Federal Housing Administration administers the FHA Loan program, which provides many low and moderate income individuals and families with access to affordable home loans for single family dwellings and multi-family properties that include up to four units.
FHA Loans are available for new and used homes, as well as for prefabricated and mobile homes. Depending on your particular financial situation, you may be able to finance fees for renovations and repairs into your mortgage. FHA Energy-Efficient mortgages allow home buyers to include fees associated with energy improvements into their home loans.
The credit qualification criteria are not as stringent for FHA Loan programs as for conventional mortgages. Additionally, these types of loans have low closing costs, minimal down payment requirements, and don't require private mortgage insurance (PMI).
Veterans Administration (VA) Home Loans
Most veterans of the United States Military are eligible for federally guaranteed home loans. Surviving spouses are also able to benefit from VA loans. Eligible veterans may apply for low-interest rate home loans to purchase a home. Because down payments and mortgage insurance are not required, these loans are often significantly less expensive than conventional loans.
Good Neighbor Next Door Loan Program
The department of Housing and Urban Development (HUD) offers substantial discounts to individuals in certain service oriented professions on eligible properties in areas targeted for revitalization efforts. Qualified homebuyers can receive grant funds equivalent to 50 percent of the list price of the approved property. The property must remain the sole residence of the homebuyer for a minimum of 36 months. If the residency requirement isn't met, the grant amount must be repaid.
Eligible professionals include:
- Emergency Medical Technicians
- Fire Fighters
- Law Enforcement Officers
- School Teachers (pre-K through 12th grade)
Home Ownership for Public Housing Residents
There are a few federal home buying programs designed to help public housing residents become homebuyers. These programs are administered through local Public Housing Authorities (PHAs). For example, under the HUD Section 32 program, PHAs are allowed to sell public housing units to eligible residents. Eligible public housing residents working toward becoming first time homeowners can also participate in the Housing Choice Voucher program, which provides down payment assistance.
Indian Home Loan Guarantee Program
The Section 184 Indian Loan Guarantee program was introduced in 1992, for the purpose of encouraging home ownership for Native Americans on tribal lands. Section 184 loans have very low down payment requirements and don't require mortgage insurance. These loans are available through participating lenders.
American Indians and Alaska natives who are members of federally recognized participating tribes are eligible for Section 184 loans. Loans are also available to eligible tribes, Indian Housing Authorities, and tribally designated housing entities.
USDA Section 502 Rural Development Loans
Low income individuals and families interested in purchasing a home in a rural location may be eligible for Section 502 Rural Development Loans. To be approved for this federal home buying program, applicants must not currently own adequate housing. Household income cannot exceed 115 percent of the median income for the area in which the property is located, but applicants must have sufficient income to cover the mortgage payments.
Purchasing a HUD Home
In addition to the many different HUD-insured grant and mortgage programs, there are also opportunities to purchase homes acquired by the agency as a result of FHA loan foreclosures. Priority is given to individuals seeking to purchase homes to live in, but investors may also purchase available properties. There are no income or residency restrictions, and anyone with cash or access to loan funding can purchase a HUD home. Prospective buyers can access state specific HUD property listings on the agency's website.
Investigate All Federal Home Buying Program Options
When you're in the market for a home loan, it's in your best interest to investigate all options available to you. Be sure and discuss your situation with your real estate agent mortgage loan officer, so he or she can help you identify if you are eligible for one or more of the federal home buying programs.