Fill in this short contact form to be contacted about government-backed home purchase programs. Learn more about available programs and qualification requirements below.
There are several federal government programs designed to help Americans purchase a home. Each of these programs has unique benefits and requirements.
1. Minimum credit requirements: While low credit scores are often acceptable for government refinance programs, for government home purchase programs you normally need a middle credit score of 600 or higher to qualify. Also, you normally need to be 2-3 years out of any home foreclosures or chapter 7 bankruptcies.
2. Income requirements: To qualify for a home purchase loan, you will need to show the ability to comfortably make your new payments. You normally need to show that your gross monthly income (meaning income before taxes and other deductions are taken out) is more than twice the combined minimum monthly payments on all of the debts you are paying off.
As an example, if a family’s before-taxes income is $5000 per month, they would want the total payments on their debts (including the new mortgage, car payments, student loans, credit cards, and so on) to be no more than 50% of $5000, or $2500 per month. Contact us to speak with someone who can run calculations on your debt to income ratios.
Here are some basics on the most prominent government-backed home purchase programs:
– Requires just 3.5% of the loan amount as a down payment. (With FHA purchases, it is wise to have at least 4% of the purchase price available to help cover the appraisal fee and other costs at closing)
– Available everywhere in the U.S.
– The FHA has an up front mortgage insurance fee of 1.75% of the loan amount rolled into the loan and then has a monthly mortgage insurance fee for the life of the loan
– There are limits to the maximum loan size depending on to state/county the home is in
– The FHA program has the most lenient underwriting standards with regard to past credit problems and medical collections of any of the major home loan programs
– Only available to military veterans with VA eligibility
– No down payment required
– No ongoing mortgage insurance
– Lenient credit score requirements
– The VA has an up front funding fee that rolls into the loan
USDA rural housing program
– This purchase program only applies to homes designated as being in rural areas by the USDA (contact us to check on eligible properties)
– No down payment required
– Requires a 2.75% guarantee fee rolled into the loan and small monthly mortgage insurance fee
– There are limits to the amount of income a family can earn to be eligible for this program. Families that make too much money will not qualify.
– Underwriting and credit score requirements on USDA rural housing loans are generally more stringent than FHA loans
Fannie Mae or Freddie Mac conventional mortgages
– Normally requires at least 3% down
– Has somewhat stricter income and credit requirements than FHA or VA loans
– No mortgage insurance with a down payment of 20% or more. Down payments of less than 20% require mortgage insurance.
– Loan size up to $417,000 everywhere, even higher loan limits in some high cost areas
FHA reverse purchase program
– Normally requires at least 40-50% down
– Borrower must but at least 62 year old
– The appeal of a reverse purchase is no mortgage payments for the rest of the borrower’s life. (Let us know in the notes of the contact form if you are interested in learning more about this program)
There are also other local government programs all over the country that can help with a home purchases.